Malaysia Government Grant is Specifically for Small Businesses, Which is Very Helpful for Investors Who Are Just Starting Out in Malaysia. Aside From That, These Grants Are Made to Encourage Investors
Small businesses are an essential part of the Malaysian economy, which contributes to about 1/3 of the GDP that provides job opportunities to workers in Malaysia. The main sources of SME financing are banking institutions that provide over 90% of all financing needs. The SME provision financing is supported by the Bank Negara Malaysia, Development Financial Institutions, and Government Funds. You should know the Malaysia government grant to encourage investors.
As the years went by, there were different activities that were implemented to boost SME Financing in Malaysia.
Here are the government grants in Malaysia that help small businesses put up their venture and get started:
Soft Loan Schemes for Services Sector (SLSSS)
The Soft Loan Schemes for Services Sector is a Malaysian government grant (SLSSS). Part this scheme is the Malaysian businesses under the services sector which can receive up to RM 5 million loans that has a rate of 4% for SMEs and other companies get 5%. The Malaysian Industrial Development Finance Berhad (MIDF) was the one that implemented this scheme.
Graduate Entrepreneur Fund
Banks are normally the most ideal places to start, but most of them would need some kind of collateral before they will give your loan approval. Aside from that, your business should start operations for at least 2 years. The Graduate Entrepreneur Fund is only for startup businesses and the target market for this are the young entrepreneurs and the ones with businesses that are already operational. This comes from the SME banks in Malaysia. You should be a Malaysian citizen who is not older than 40 years old, you are a university graduate less than 15 years ago, and you can loan a maximum of RM500,000 with a low-interest rate.
This loan is interest-free and it can be paid back up to 48 months, and you do not need a guarantor in case you are loaning less than RM100,000. Applicants have the option to choose between applying it for a new or existing business.
Young Entrepreneur Fund
Another thing in the list of Malaysia government grant is the Young Entrepreneur Fund for Malaysian entrepreneurs so they can start their service sector business. In order to qualify for this program, applicants should be 18 to 30 years old. The amount they can loan is from RM20,000 to RM200,000 at 5% per year. You can inquire with the SME bank about this loan.
Shariah-compliant SME Financing Scheme (SSFS)
This aim of this scheme is the businesses that have been operational for two years and does not qualify as a start-up or new businesses. It is under the Islamic business loan, so businesses that are under the Islamic principles fit in it. For instance, if you have a business that sells pork, you cannot apply for this loan. However, not Non-Bumis may apply for this grant. The participating banks are Bank Islam, Bank Rakyat, HSBC Amanah, and not including SME banks.
There is a big loan offer amount, and it ranges from RM 100,000 to RM 5 million, and the loan term is up to 5 years. A lot of people are encouraged to apply for this loan because there is about a 2% discount provided by the Government. However, some conditions have to be fulfilled, and it needs to be in accordance with the MSC status by the MDeC or it received certification under the 1-InnoCERT so it can qualify for the scheme. However, in case you do not have the certificates and thinking of applying, there is a way to solve this. The SCORE is the SME Corporation’s rating system so you can tell which level your company belongs to. Your company should have a rating of at least 3 stars so you can get the loan.
SME Emergency Fund (SMEEF)
This is a funding program that helps SMEs in the renovation of their business premises if a natural disaster causes damages. The SMEEF can either be given as a loan or grant, which all depends on the kind of business it will be used for. According to the enterprising needs, they are able to apply for SME Corporation Malaysia (SME Corporation Malaysia) for finances with a maximum of RM100,000.
Green Technology Financing Scheme (GTFS)
If you are planning to open your own business, but do not have any more ideas on how to fund it, you can think about Green Technology because the Go Green trend is becoming more popular. Remember that your business must be under any of these sectors: energy sector, green building sector, waste and water management, and transport sector.
Your company should have a GTFS certificate, and you will only be given a grant if your company meets the requirements of the Green Technology Corporation. You will receive 2% subsidies interest that comes from the government or 60% is guaranteed by the CGC. The size of the loan is huge and it is divided into two categories that are up to RM 50 million for producers like a manufacturing factory. Retailing companies or other consumer businesses receive up to RM10 million.
Halal Industry Fund
Based on the name, this is for businesses that are related to Halal. This is a team-up with the SME bank and HDC or the Halal Development Corporation in Malaysia to assist new businesses to improve the Halal market. When your business is selling certified Halal products, you can apply for this kind of grant. You should not be an MNC or GLC subsidiary that has equity of at least 60%.
These are the grants in Malaysia for small businesses that are worth knowing.