Things to Know Before You Apply for a SME Loan
Important tips that you could not afford to miss
| Manufacturing | Maximum sales turnover of RM50 million or Maximum of 200 full-time employees |
| Service and other sectors | Maximum sales turnover of RM20 million or Maximum of 75 full-time employees |
An important criteria to be met in order for you to receive Small Business Financing from SME Bank – which was established specially by the Malaysian Ministry of Finance to assist SMEs – is that your business must have at least two years of operation under its belt with proper records of operation being documented during that period, before you apply for an SME Business Loan.
SME Corp. Malaysia advises that for a Malaysian SME to receive funding in the form of soft loans, a majority of its equity must belong to a Malaysian or Malaysians who are currently residing in Malaysia.
Specifically speaking, this body states that at least 51% of the business’ equity must be owned by Malaysians.
Knowing each loan’s maximum limit will allow you to apply for a source of financing that truly meets the financial needs of your business.
The maximum amount differs from one loan to the next depending on a variety of factors, such as the purpose of the loan.
SME owners who are looking to purchase properties for their businesses – has a cap of 148% of an asset’s value.
Another factor which affects the maximum amount would be the presence of a collateral. In the example above, the former option does not require a collateral and is thus smaller in size, while the latter can only be obtained with a guaranteed collateral from borrowers.
You may already be aware of this, but there is no harm in reminding yourself that loan tenure periods vary in accordance with the amount of money they involve.
For illustration, if you apply for SME Financing Scheme loan and obtain the maximum funding amount of RM20 million, you will have to complete your loan repayment within 25 years from the date on which you receive the money.
However, do keep in mind that you will not only be repaying the amount you borrowed within the tenure period. Interest rates will be involved, and you should clarify what the exact rate of a loan is before applying for it.
