SMEs urged to lever­age on Bank Negara SME fund

The Star Malaysia - StarBiz - - Smebiz -

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.

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