SME business loans provide a lifeline to worthy and promising Malaysian SMEs trying to cope with the ongoing effects of the pandemic.
Many learned investors and economists feel that the future of the Malaysian economy is in its SMEs. But with the effects of the pandemic still hampering the ability of many of the country’s SMEs to function and contribute to the country’s economy, it became obvious to the Malaysian government, and specifically the Minister of Finance Incorporated, that help was required to give all these SMEs the chance to contribute to a robust economy.
Creation of SJPP
The Minister of Finance Incorporated created a wholly-owned subsidiary called Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) to bridge the gap between SMEs and financial institutions and help restore them to a mutually beneficial standing.
The SJPP will guarantee up to 80% of the loans issued by the lenders to qualified SMEs, with the goal being the re-establishment of SMEs as being important contributors to the Malaysian economy.
With these low-interest SME business loans, small businesses derailed in their initial efforts to expand and grow by the business restrictions of the pandemic can get back on track and continue their climb to success.
Scope of the SME Business Loan Schemes
The comprehensive nature of the scope of the loan schemes proves the Malaysian government is serious about jump-starting the economy in the wake of the pandemic. There are a total of six different schemes across all industries and sectors aimed specifically at the SMEs of Malaysia. They are:
- Working Capital Guarantee Scheme (WCGS)
- Working Capital Guarantee Scheme – Start Up (WCGS-SU)
- Working Capital Guarantee Scheme – Bumiputera (WCGS-B)
- Working Capital Guarantee Scheme – Export (WCGS-X
- Working Capital Guarantee Scheme – Women (WCGS-W)
- Automation & Digital Guarantee Scheme (ADGS)
Each of them have different minimums and maximum loan limits, with WCGS, WCGS-X, and ADGS topping the limits with maximum loan limits of RM 10-million each.
Applying for an SME Business Loan
SMEs wanting to apply to one of the SME business loan schemes should apply at a participating financial institution. An SME’s regular bank may be a participant in the scheme, so SME owners and administrators should check with their bank first. The SME will choose the appropriate scheme and apply making note of the limits of the scheme.
The lender will assess the credit applications, and if the SME lacks sufficient collateral to satisfy their own rules for extending a loan, the lender will submit the application to SJPP under the appropriate guarantee scheme. SJPP will review the guarantee scheme application on behalf of the government, and if approved, they will inform the lender that they will guarantee the loan.
By satisfying the requirements of the individual loan schemes, these SME business loans will help SMEs all across the country to pull themselves out of debt and begin to contribute once again to a robust economy.