The pandemic has caused small businesses to fail all over the world. But in Malaysia, the government has stepped in and set up a scheme of six SME loan schemes that offer a survival lifeline to struggling SMEs in the country.
The government of Malaysia has recognized that with a large percentage of the country’s private businesses falling under the category of an SME, these businesses are disproportionately more important to the country’s economic future. To avert a possible economic catastrophe in the near future, the government is taking the proactive step of bolstering the survival of SMEs all over the country.
The Minister of Finance Incorporated, a brand of the country’s government, has set up a wholly-owned subsidiary that has been tasked with the disbursement of funds of six guaranteed SME loan schemes through participating banks and lending institutions in Malaysia. The name of the subsidiary is Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP).
Defining Scope of the SME Loans
The government is targeting six areas that reach all sectors of industry and commerce. The six SME loan schemes are:
- Working Capital Guarantee Scheme – Financing limit RM 10 million
- Working Capital Guarantee Scheme Start-Up – Financing Limit RM 500,000
- Working Capital Guarantee Scheme Bumiputera – Financing Limit RM 3-million
- Working Capital Guarantee Scheme Export – Financing Limit RM 10-million
- Working Capital Guarantee Scheme Women – Financing Limit RM 1-million
- Automation & Digital Guarantee Scheme – Financing Limit RM 10-million
The SME loan financing is to invest in the continued growth and expansion of an SMEs infrastructure, products, and services. The funds cannot be used to pay off any existing loans with a public or private lender.
Many SME’s found themselves in the unenviable situation of being in the middle of a launch or expansion when the country’s economy was devastated by the effects of the pandemic. These businesses suffered additional damage because of their timing in trying to pro-actively improve their businesses and contribute to the economy of Malaysia.
These SME loans represent an attempt to level the playing field and provide the owners of small businesses with a lifeline they can use to re-establish their businesses in the marketplace and become competitive once more.
Applying for an SME Loan
The government does not issue these SME loans. They are issued by commercial banks and lending institutions and backed by government guarantees when the applicant doesn’t qualify under the lender’s own standards. This reduces the risk to the lending institution and helps them survive the economic downturn caused by the pandemic.
To apply for an SME loan, the SME owner or administrator simply visits a participating bank. Their regular bank or lender may be a participant. They fill out the loan application provided by the lender and submits it to the lender.
If the collateral requirements of the lending institution cause the application to be disqualified for a loan, the lender forwards the application to SJPP. SJPP will assess the applicant and, if approved, notify the bank to issue the loan.
The SME loan scheme means a second life for many struggling SMEs. Talk to your bank to find out more about the loan schemes offered by SJPP.
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