You’ve struggled through your fair share of ups and downs, and you’ve pushed past a lot of uncertainty. Through it all, your business idea persevered, and you believe that you are now ready to take your small or medium enterprise to the next level.
All you need is a little bit of financing, and what better way to get that than through a SME Business Loan?
But before you dive right into your loan applications, we’d like you to know that we’re rooting for you – which is why we’ve prepared a little list below of important things to keep in mind when seeking out an SME Business Loan. Sink your teeth into it right now!
1) Official SME Status
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:
Sector Size
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.
2) Operating Time
The same criteria is also stated under RHB Group’s requirements for its BIZPOWER SME Business Loan and SME Financing Online schemes.
It is thus recommended that your business operates for more than two whole years, with propers records of operation being documented during that period, before you apply for an SME Business Loan.
3) Equity or Ownership
Specifically speaking, this body states that at least 60% of the business’ equity must be owned by Malaysians. This requirement can also be observed in other financing providers, such as in CIMB’s SME Loans – although the minimum ownership percentage in this case is only 51%.
4) Maximum Loan Amount
The maximum amount differs from one loan to the next depending on a variety of factors, such as the purpose of the loan.
For example, AmBank’s SME Portfolio Guarantee is a flexible loan that has a maximum cap of RM1 million, while its SME Biz Property Extra loan – which caters to 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.
5) Loan Tenure
For illustration, if you apply for Affin Bank’s SME Financing Scheme loan and obtain the maximum funding amount of RM10 million, you will have to complete your loan repayment within 20 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.
Conclusion
Now that you have taken note of these five key components of any SME Business Loan, get your research started and secure yourself a loan that matches your business requirements comfortably.
Don’t forget to keep your future plans for your business in mind as well when applying, as a business that is planning to expand globally will probably require more financing than one that is planning to stay on local shores.
Check out our Financing Solutions here.
About Limra Assets
Limra Assets is a Shariah-compliant financing solutions financier that provides loans for property financing, SME businesses loans and gold investment. We offer a range of financing options to help individuals and businesses, including alternative financing for businesses that are unable to obtain funds. Our goal is to provide access to funds for investments in a Shariah-compliant manner that focuses on transparency, customer service, and competitive rates, Limra Assets can be a valuable partner in your gold investment journey.
If you’re interested in learning more about Limra Assets and our Shariah-compliant financing solutions for property purchases, gold purchases or business loans, please contact us for more information.
Disclaimer:
It is important to note that taking out a loans for any purchases and gold investment, whether through Limra Assets or any other lender, carries risks and should be approached with caution. It is important to carefully consider your financial situation and investment goals before taking out a loans, and to ensure that you fully understand the terms and conditions. Additionally, investing in gold carries its own risks and should be done with the guidance of a financial professional. This information and all external links are provided for educational purposes only and should not be considered financial advice.
You’re finally ready to apply for a SME Business Loan.
You’ve struggled through your fair share of ups and downs, and you’ve pushed past a lot of uncertainty. Through it all, your business idea persevered, and you believe that you are now ready to take your small or medium enterprise to the next level.
All you need is a little bit of financing, and what better way to get that than through a SME Business Loan?
But before you dive right into your loan applications, we’d like you to know that we’re rooting for you – which is why we’ve prepared a little list below of important things to keep in mind when seeking out an SME Business Loan. Sink your teeth into it right now!
1. Official SME Status
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:
Sector Size
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.
2. Operating Time
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.
The same criteria is also stated under RHB Group’s requirements for its BIZPOWER SME Business Loan and SME Financing Online schemes.
It is thus recommended that your business operates for more than two whole years, with propers records of operation being documented during that period, before you apply for an SME Business Loan.
3. Equity or Ownership
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 60% of the business’ equity must be owned by Malaysians. This requirement can also be observed in other financing providers, such as in CIMB’s SME Loans – although the minimum ownership percentage in this case is only 51%.
4. Maximum Loan Amount
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.
For example, AmBank’s SME Portfolio Guarantee is a flexible loan that has a maximum cap of RM1 million, while its SME Biz Property Extra loan – which caters to 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.
5. Loan Tenure
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 Affin Bank’s SME Financing Scheme loan and obtain the maximum funding amount of RM10 million, you will have to complete your loan repayment within 20 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.
Conclusion
Towards better borrowing!
Now that you have taken note of these five key components of any SME Business Loan, get your research started and secure yourself a loan that matches your business requirements comfortably.
Don’t forget to keep your future plans for your business in mind as well when applying, as a business that is planning to expand globally will probably require more financing than one that is planning to stay on local shores.
Check out our Financing Solutions here.