SMEs urged to leverage on Bank Negara SME fund

LOCAL small and medium enterprises (SMEs) have been urged to leverage on the Bank Negara SME Fund, which currently stands at RM3bil, to finance and lower their cost of doing business.

Assistant governor Jessica Chew said the fund, which served all economic sectors including startups and businesses with no collateral, can be utilised for working capital and purchase of machineries.

“Previously, we had four different funds for different purposes. We have consolidated them under one fund to make it easy for SMEs as some funds were fully-utilised but some were under-utilised.

“Our rates are much cheaper (than that available in the industry), so we would advise those underserved segments to leverage on the fund,” she told a media briefing recently.

The revolving fund that is convenient and affordable for SMEs, was introduced in the late 90s with a total allocation of RM10.4bil.

Of the total, RM7.4bil has been utilised, with the lending approval revolved three times to the equivalent of RM30.2bil, benefiting more than 74,000 SMEs.

Chew said the fund, available at all commercial and Islamic banks, development financial institutions and Credit Guarantee Corp Malaysia Bhd, provided financial assistance of up to RM5mil and SMEs were required to repay within five years.

She explained that there was a comprehensive financing support for enterprises at all stages of their business life-cycle and that one out of five financing approvals were for start-ups.

“Financial institutions are the largest financing providers for SMEs, contributing about 97% of total financing to SMEs across the spectrum.

“Thirty per cent of the financing approved under the fund went to startups.

“The continuous support is reflected by the increasing share of SME financing compared with financing to the corporate sector. This indicates that SMEs are the key growth area for financial institutions, moving forward,” she added.

Chew pointed out that although ample funds were provided by financial institutions, ministries and agencies to support SMEs, the lack of awareness about the availability of such funds in the country was a challenge to SMEs’ future development and limited the segment’s contribution to the country’s gross domestic product.

“SMEs that are looking for financing, sometimes don’t know that there are such funds as the Bank Negara SME fund and some applications (for funding) may not be within banks’ risk appetite.

“But, (as for) our fund, there is still allocation for the SMEs to tap,” she added.