Business Startup

Government Loans and Funds in Malaysia

In Malaysia, there are several ways to get your SME (Small and Medium Business) or entrepreneurship efforts underway. It is important that you know where to start looking or you will lose out on the available resources as they will surely help you kickstart your business (if you are a startup) or to grow further (if your business is already running).

Malaysia Grant 2018

Having a good business idea is only the first step. You need to have a strategy after that, a good team and perhaps more importantly, funds. You might have your own savings but wouldn’t it be good to have some form of investment coming in from the government? Here are some options you can consider.

Graduate Entrepreneur Fund

Banks are usually the best channel to start. However, most would require you to have some form of collateral before they can approve your loan. On top of that, your business should be operational for a minimum of 2 years or more. The Graduate Entrepreneur Fund meanwhile is different because it is meant for startup businesses. The target market for this fund is the young entrepreneurs as well as those with businesses that are already in operations. This is provided by one of the SME banks in the country. Among the requirements include:

  1. Malaysian citizen not more than 40 years of age
  2. Graduated from university less than 15 years with at least a diploma
  3. Loan up to RM500,000 with a low-interest rate

This loan comes with an interest-free non-payback period of up to 48 months and it does not need a guarantor if your application is less than RM100,000. Applicants can choose between applying the loan either for a new business or an existing one.

Young Entrepreneurship Fund

This loan is available for startups and businesses that are growing. As compared to the Graduate Entrepreneurship Fund, it is quite the same except that the requirements are not as high. The applicant need not have a diploma (certificate will suffice) and age requirement is between 18 and 30 years of age. The maximum amount that you can apply is up to RM100,000 with a standard 5% interest rate.

Shariah-Compliant SME Financing Scheme

Known in short as the SSFS this is fund is not so suitable for startups. It is more intended for businesses that have already been operational for at least 2 years. To be eligible for this loan, the business must comply with the Islamic principles as it is under the category of Islamic Business Loan. In other words, the products and services must be certified Halal before any applications can be considered. It must be noted however that applicants can be non-Muslims as well. Many banks in Malaysia offer this loan including:

  1. Bank Islam
  2. HSBC Amanah
  3. Bank Rakyat

What makes this loan so attractive is that you can apply a high amount which could be up to RM5 million if you fit the criteria set. The term of the loan can be up to 5 years (and more in certain cases). Because the amount is high, the requirements are quite strict. This includes being certified as an MSC Malaysia status company, among others. It

Fund for Small and Medium Industries 2

This is the second of such fund. Known in short as FSMI2, it is not a very well-known fund because not many promote it as banks do not get a lot of profit from selling this fund. Maybank and CIMB Bank are 2 banks currently offering this fund where you can apply only if your annual sales turnover of your business is more than RM500,000 but not more than RM25 million annually. Besides that, you should have more than 150 people under your payroll. It is meant for companies which have been running for more than 3 years but lesser than 7. As such, the amount that you can loan can be up to RM3 million.

Green Technology Financing Scheme

The GTFS is a fund for companies which is ready to ‘go green’. This is one way that you can consider for your company if you are running out of ideas to get fresh funding. Your business must be either in the:

  1. Green building sector
  2. Water and waste management sector
  3. Transport sector
  4. Energy sector

To apply for this loan, you must obtain the GTFS certification issued by the Green Technology Corporation. From this loan, you will get the 2% interest subsidy from the government where you can apply for one of the 2 categories available.

Halal Industry Fund

As the name implies, this fund is intended for businesses in the Halal-related segments. This is a collaboration between the SME Bank and the HDC or Halal Development Corporation in Malaysia intended to help new businesses to grow the Halal market. As long as your products and services are Halal (certified), you are eligible to apply for this fund. You must not be a subsidiary of any MNC or GLC with a minimum Malaysian equity of 60%.

The Cradle Investment Programme

The CIP is probably the single most long-lasting and established fund in Malaysia. This fund is managed by Cradle Fund Sdn Bhd which helps innovative people to grow their ideas. The amount that you can apply for can be up to RM150,000 for every idea where it not only provides the funds but also any additional help you might need. This can be in the form of mentorship or incubation where necessary. In the event that your business idea failed or if you do not complete the project as proposed, you will have to repay the grant with a nominal interest.

Enterprise Innovation Fund

This fund is handled by MDeC and is under the purview of MOSTI or Ministry of Science, Technology and Innovation. It is aimed at helping companies to commercialize their ideas. You can apply up to RM250,000 at an 18 months tenure for this.

Other known funding

Besides those mentioned above, there are other parties you can approach for funding of your startup. This includes:

  1. Nexea Angels (Malaysia) – This is an Angel Investor network with a wide reach in Asia and is currently available in Malaysia
  2. BizAngel (Malaysia) – Also another Angel Investor network which has been making a lot of inroads in Malaysia lately
  3. 500 Startups (Malaysia) – This is a Venture Capital firm which has been sought after by many entrepreneurs and startups