What You Should Know Before You Apply for SME Business Loan in Malaysia

Are you ready to take off to the next step?

You’ve been through the struggle for your share of business ups and downs and you’ve progressed over several uncertainties. Through all of that, your business idea survived and you have a strong feeling that you are ready to take your medium or small enterprise to the next step. All that is left is a little boost in cash flow. What you need is a little bit of financing, and the most recommended way to get it is through an SME business loan.

Before you initiate the loan application process, there are specific pre-conditions that must be met. Therefore, below is a little list of important things that you must get it right before applying for an SME Business Loan in Malaysia.

The Official SME status

Is your small or medium enterprise officially recognized as an SME? The Bank of Nagara Malaysia (BNM), an enterprise is recognized as an SME ONLY if it falls under the following parameters:

  • Manufacturing Sector; maximum of 200 full-time employees or maximum sales turnover of RM50 Million
  • Service and other sectors; a maximum of 75 full-time employees or sales turnover of RM20 million

In addition to this, the SME must be registered as an entity of such features under Suruhanjaya Syarikat Malaysia (SSM). Your enterprise will be officially recognized ONLY if it meets the above conditions.

Time of Operation

Operating time is an essential criterion that must be met for your SME to access small business financing from SME bank. The Ministry of Finance established SME Bank assist SMEs specifically. To qualify, your enterprise must have been in operation for not less than two years. Similar conditions have also been placed by SME Financing Online and BIZPOWER SME Business Loan. Proper documentation indicating your SME’s operation for the period must be documented before official application for the SME Business Loan.

Ownership or Equity

Malaysia’s SME Corp advises that for any Malaysian SME to receive soft loan financial support, a larger portion of its equity must be owned by Malaysians or Malaysian who reside within Malaysia. Not less than 60% of the business equity must be owned by Malaysians.

The Maximum Loan Limit

Knowing the limit of financial support will enable SME owners to know what source of financial support suits their needs. The maximum limit differs with regards to a variety of conditions such as the purpose. An example of a determinant is the availability of collateral. However, lenders like AmBank’s SME Portfolio Guarantee offers a maximum cap of up to RM1 million without collateral.

The Tenure

The loan tenure period varies with the amount offered. For example, if you request for Affin Bank’s SME Financing Scheme loan and access the maximum funding of RM10 million, you will be required to complete the repayment process within 20 years from the approval date.  Secure a loan which matches your business needs.