The Malaysia government is urging small and medium enterprises (SMEs) to take full advantage of the many business loan facilities to grow their business.

More and more loans and financial assistance have been rolled out for the past few years to accommodate the growing sector of the SME industry. At present, close to 90% of the businesses operating in Malaysia are categorized under SME.

The latest facility involving RM1.2 billion financing was launched in July 2008 in the wake of recent economic downturn.

The facility offers two separate business loans – the SME Assistance Facility amounting to RM700 million, and secondly the SME Modernization Facility, offering RM500 in total assistance.

The SME Assistance Facility

The first, SME Assistance Facility will help assisting struggling entrepreneurs to overcome temporary cash flow problems due to escalated cost and prices. Each SME can take up loan up to RM1.5 million with maximum tenure of 5 years. To be eligible, the SME business must be owned by Malaysians with at least 51% ownership, and does not have any affiliation with government linked companies (GLCs). The business loan is applicable for SME in any sector or industry.

The SME Modernization Facility

The latter, SME Modernization Facility is offered for small and medium business owners planning to purchase or upgrade their equipment and machinery, which can be new, second hand or reconditioned equipment. Through the facility, each SME can apply for an aggregated loan amount of RM5 million.

For the two loan schemes, participating banks include all commercial banks and Islamic banks, Bank Perusahaan Kecil & Sederhana (SME Bank), Bank Pertanian Malaysia (Agrobank), Bank Rakyat and Export-Import Bank Berhad. Entrepreneurs interested in this scheme can approach any of the participating banks directly.