Rural Entrepreneurship Financing In Malaysia: SPED, The Rural Economy Funding Scheme
Rural entrepreneurship matters a lot. This concept not only helps bring more people in the field of business from all over the country but also contributes a lot to the economy of the entire nation. This has easily been observable in the context of Malaysia. A country with many villages, it has been a need that some programs be organized to help people from different countryside’s come forth with an innovative business idea. And one of them is the Rural Economy Funding Scheme (SPED) from the Ministry of Rural & Regional Development (KKLW). This is a program targeted to the rural Bumiputera entrepreneurs, and today we talk about it in details.
Rural Economy Funding Scheme (SPED): What Is It?
The rural Economy Funding Scheme or Skim Pembiayaan Ekonomi Desa (SPED) is a loan incentive from the Malaysian government, which provides financial assistance to Bumiputera entrepreneurs from the rural areas of Malaysia. The objective of this program is to make it convenient for rural Bumiputeras invest in their own business and operate it innovatively, helping them with the economic aids needed to reach to more the bigger market with a low return loan. The scheme has also been expected to attract more rural Bumiputeras to entrepreneurship, finally helping enhance the rural economy of Malaysia.
Under this program, any rural Bumiputera entrepreneurs with a scalable business idea will get fundings from RM 20,000 to RM500,000. It depends on the nature of a business and how much time it has been running. Companies in operation for less than three years will get a loan from RM20,0000 to 250,0000 while, for companies running more than three years, they could get loans up to RM 500,0000. The financing is based on Syariah concept (Ijarah Thummalbai, Bai ‘Bithaman Ajil, Bai’ Dayn, and Al Qardhul Hassan), and the loan term is 3 to 5 years for up to 250,000 and 5 to 7 years for loans more than that. The scope of the Skim Pembiayaan Ekonomi Desa covers working capital, purchase of machinery and tools, and also to renovate the current infrastructure. The financing is allowed three times as long as the loan amount doesn’t exceed the limit.
Here are the requirements to be eligible for the program.
- The company should be incorporated in Malaysia with SSM.
- Bumiputera should wholly own the company.
- The business should be full time.
- More priority is given to the businesses which operate in rural areas.
- The company should have a business premise, separate from the residence and equivalent residential licenses.
- The business should be promising and viable.
- The business should be completely legal and should follow every rules and regulation imposed by the government.
- Note: For any businesses which have not taken any prior loan, they can apply for financing more than RM 250,000. However, SPED may fund the loan, once at least 75% of it has been settled.
These the financial institutes that implement the program.
- Small Medium Enterprise Development Bank Malaysia Berhad
- Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)
- To apply for the scheme, first, you will need to get all the documents that show that you comply with the terms above. This includes business profile, incorporation certifications among the others. Also, you might need analysis reports to show your business is scalable. Also, you will need to pay the processing fees.
- After gathering the things you will need, you could go to any branch of the coordinating banks or KKLW to get the SPED application form. There will be guidelines which help you fill out the forms in two sets. Submit the first set to KKLW while the other one is to be given to the implementing agency. If approved, you will be notified by the bank. You will need to sign a loan agreement before getting the funds.
Well, this was it for the SPED scheme. I hope this article will help you.