Type of Business Loan in Malaysia 2023
If you have a business idea but don’t have the necessary resources, you can take out a business loan in Malaysia. This can help you with ideas & things like expanding your business. There are several different options to consider for loans in Malaysia so be sure to find the best type for your needs.
We found the best business loans in Malaysia for you that can help you offer your clients a range of great services. With one of these top options, you will no longer have to wait to offer your business services. Below are the type of business loan in Malaysia that you can have a look:
Type of Business Loan in Malaysia
1. SME Loan
SMEs or also known as Small and Medium-sized Enterprises are businesses that maintain revenues, assets or a number of employees below a certain threshold. These business entities are often regarded as the backbone of Malaysia’s developing economies.
Besides opening up a wide range of jobs, SME businesses also have an entrepreneurial spirit that helps drive innovation. Generally, to qualify as an SME, your annual turnover and number of employees must fall into a certain range.
Besides applying for bank loans from the commercial banks in the market, SME business owners can opt to apply for one-off SME loans from other service institutions like development financial institutions (DFI).
The government has backed these loan providers who offer specificity for the various needs of individuals and businesses.
Take a look at some of the DFIs that you can opt for financial assistance from:
- Bank Rakyat
- Bank Pembangunan Malaysia Berhad
- Agrobank
- SME Bank
- BSN
- EXIM Bank
2. Syariah Compliance Business Loan
One of the most popular Islamic banking models is called “salam” banking. This model is becoming more and more popular for Muslims for a variety of reasons, primarily because it complies with the fundamental principles of Islamic law.
Islamic banking is one of the ways Muslims in America can use to finance business growth and development. Islamic financing is providing loans based on rules & guidelines set out by Shariah. Islamic loans are different from other types because they do not have any interest, which is against Islamic principles. Interest is also forbidden in Islamic law as part of the faith’s beliefs.
You might be interested in Shariah-compliant financing – there are several different options from Islamic banks & institutions. Some banks may offer loans to their customers if they use the bank’s credit card. The bank will then decide at what interest rate they want to extend the loan and how much money needs to be paid back in total. However, it is not only for basic needs and you should use them as investments and to provide something luxurious.
3. Business Loan with Invoice Collateral
Invoice financing is a form of short-term borrowing where your business takes out a loan and borrows money against the amount owed on invoices you’ve issued to your customers. You can then use these trade receivables as collateral.
Invoice financing can be used in any industry, such as construction, retail, transportation and consumer goods.
A receivable loan can help you tackle a situation where a huge percentage of your assets are locked in the form of outstanding invoices. With this increased availability of money, you will spend less time chasing payments and more on growing your business. This can make invoice financing for small businesses an attractive option.
4. Business Loan with Fixed Asset Collateral
The last type of business loan in Malaysia is loan with fixed asset collateral. Business collateral is something valuable, such as property or stocks, that you put up against a loan. If you don’t repay the loan, the lender can take the asset and try to make money from it so they’re paid back.
Most businesses rely on some form of collateral as a security when applying for a loan. If you are unable to put up any form of collateral, your interest rate will most likely be higher or the terms less favorable.
Where to Get a Business Loan Malaysia?
1. From Private Banks
Business loans from private banks are easier to apply for and can be faster than government loans. They often require less paperwork and take less time to process than a government loan.
It’s possible to get a personal loan approved and dispersed in just less than 30 minutes. The average time it takes really depends on your bank, the type of loan you borrow, and the credit score you have.
In addition, private bank loans typically have an unsecured option; this means you can apply without pledging your home or a Fixed Deposit as collateral.
2. From the Government
The Malaysian government has various financial schemes in place to help support entrepreneurs. This can include support for startup costs, new business grants, or freelance grants.
Here are some government-sponsored grants that could help you get started in Malaysia. We hope you find it useful as you begin your new journey as an entrepreneur.
1. TEKUN Financing
The TEKN Financing scheme is open to all bumiputeras except for those under the SPK category. You will find two main categories: the SPS, and the SPK. The SPK scheme allows small businesses to apply for a loan amount of between RM 10K to 50K whereas the SPS scheme grants loans within the range of RM 50K to 100K.
2. Tabung Pembangunan Pengangkutan Awam (TPPA)
SME Bank Malaysia runs the Tambung Pembangunan Pengangkutan Awam scheme, which is for those in the public transportation industry and eligible to apply. The range of banking services available for this scheme include loans.
3. Soft Loan Schemes for Services Sector (SLSSS)
The Soft Loan Schemes for Service Sectors, just as the name suggests, is for Malaysian businesses in the service sector. The Malaysian Industrial Development Finance Berhad (MIDF) is a bank for SMEs and other companies in Malaysia that offers loans of RM 5 million with rates of 4-5%.
4. Rural Economy Funding Scheme (SPED)
The main function of the Rural Economy Funding Scheme is to increase the number of Bumiputera entrepreneurs in rural sectors. This can be achieved by making it easier for people to get into business and by providing them with sufficient funding at an early stage. The scheme is for Malaysian businesses that are 100% Bumiputra and offers a business loan amount of between RM 20k to 50k. It’s based on the Islamic concept of ‘qard hasan’ which means ‘good loan’.
5. Tabung Usahawan Siswazah (TUS)
The Tabung Usahawan Siswazah provides financial assistance to Malaysian finance graduates. They offer 200K RM at 4% for a maximum period of 10 years with a moratorium up to 2 years.
6. Tabung Pembangunan Usahaniaga Peladang (TPUP)
The Tabung Pembangunan Usahaniaga Peladang scheme is for Malaysian farmers. It helps them turn their livelihood into a profitable business. The scheme is implemented by Lembaga Pertubuhan Peladang (LPP).
7. Bumiputera Enterprise Enhancement Programme (BEEP)
The Bumiputera Enterprise Enhancement Programme (BEEP) is a Malaysian government programme. Under the scheme, SME Bank provides financial assistance as well as business training to Bumiputera businesses. It is basically an entrepreneurial development programme, not just a funding scheme. It aims to bring more Bumiputera SME businesses in the country.
3. From Pinjaman Compare
Pinjaman Compare is a portal that educates, consults, and assists whoever is looking for financial assistance. Financial assistance here means to obtain a loan from the right organization or institution in Malaysia such as a bank and money lender.
Pinjaman Compare will analyse your application and then submit it to the related parties. Once this has been done, you can expect to hear from them and for them to process your application.
Most of the people looking for the lowest interest rate personal loan, business loan in Malaysia, SME loan, housing loan, hire purchase loan and others. However, which of the bank or licensed money lender provides the best rate and the highest amount are the doubts.
It can be exhausting to spend lots of time on finding the best rates and preparing different kinds of documents. There are a lot of audit calls too. Pinjaman Compare could help you solve the problem with just a single submission.
Read also: Interest Rate for Business Loan in Malaysia, How to Apply Loan for Business in Malaysia
References
E3Hubs and *, N. (2020) How to get a business loan in Malaysia, E3Hubs. Retreived at: https://e3hubs.com/blog/business-loan-malaysia
Islamic loan or Shariah Compliant Financing: AIMS UK, AIMS (2022). Retrieved at: https://aims.education/what-are-shariah-compliant-loans/