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Small & Medium Enterprise (SME) Loan

Things to Know Before You Apply for a SME Loan

Important tips that you could not afford to miss
Is your business officially recognised as a Small or Medium Enterprise (SME)? According to Bank Negara Malaysia (BNM), for a business entity to be recognised as a SME, it should fall within the following parameters:

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
Additionally, your SME should also be registered as an entity of such a nature under Suruhanjaya Syarikat Malaysia (SSM). Only then will its status as an SME be officially recognised, and this recognition is a make-or-break part of your SME Business Loan application.

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.

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Features:

No Collateral Loan:

  • Financing Amount: Up to RM 5 Million
  • Type of Loan: Term Loan
  • Tenures: Up to 7 years
  • Securities: No Collateral Required

Collateral Loan:

  • Financing Amount: Up to RM 20 Million
  • Type of Loan: Term Loan
  • Tenure: Up to 25 years
  • Land or property title

Criteria:

  • The business must be in operation for at least 3 years
  • Annual sales turnover between RM 500k to RM50 Million
  • Malaysia-owned more than 51% shareholding

Required Documents:
Sdn Bhd (Private Limited)

  1. Latest Audited Financial Statements
  2. Latest 6 Months Business Bank Statement
  3. Form 9 (Certificate of Incorporation) OR Companies Act 2016 – Section 14, 15 & 17
  4. M&A (Memorandum & Article of Association) OR Companies Act 2016 – Section 32
  5. Form 24, 44, 49 OR Companies Act 2016 – Section 78, 46, 58
  6. Photocopy of IC of Directors
  7. Company Profile, Product Catalogue, Certification and Other Relevant Information. (If Any)

Partnership

  1. Form D
  2. Latest Income Tax Return (Form B/BE) & Tax Receipt
  3. Last Complete Financial Statement (Trading / Management Accounts)
  4. Latest 6 Months Business Bank Statement
  5. Photocopy of IC of Directors
  6. Company Profile, Product Catalogue, Certification and Other Relevant Information. (If Any)

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