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A guide for SMEs in Malaysia to government grants and financing programmes

SMEs in Malaysia

Small and Medium Enterprises or SMEs in Malaysia are part of the backbone of a country’s economy as they play the role of the ideal incubators of innovative solutions, driving economic growth across sectors. Despite their ingenuity and passion, SMEs in Malaysia can have the most limited resources and may struggle with volatile revenue streams.

Recognising these issues affecting this section of the economy, the Malaysian government has established an array of grants and initiatives over the years to help SMEs in Malaysia propel their businesses further.

Highlighted below are some of the key initiatives available as of 2024.

TERAJU Initiatives for SMEs in Malaysia

TERAJU, also known as the Bumiputera Agenda Leadership Unit, is an agency under the Ministry of Economy with the sole purpose of empowering the Bumiputera’s socio-economic and economic development through strategic interventions, initiatives and programs.  Under TERAJU, the agency has partnered with several local banks to provide several financing initiatives: the Bumiputera Supply Chain (BSC) Financing Programme in the Wholesale, Retail, and Healthcare sectors; the Financial Supply Chain (FSC) Programme; and the Bumiputera Frontier Financing (BFF) Programme for Exporters.

  • In collaboration with SME Bank Group: BSC Financing Programme for Wholesale and Retail

The BSC Financing Programme, in partnership with SME Bank Group, is dedicated to SMEs in Malaysia, specifically in the Manufacturing, Wholesale, Retail and related sectors to ease the financial burden, especially concerning the companies’ supply chain matters and costs. The programme offers financing aid between RM 500,000 and RM 5 million covering up to 85 per cent of the cost up front. Micro, small and medium enterprises as defined by Malaysia’s SME Corp with a minimum of 60 per cent Bumiputera shareholding are welcome to apply through the SME Bank across the country. For more information on the eligibility criteria and how to apply, read the full product disclosure here or visit their website.

  •  In collaboration with Bank Muamalat: BSC Financing Programme

Similar to the SME Bank partnership, the TERAJU and Bank Muamalat collaboration is for the BSC Financing Programme targeted for manufacturers, producers, wholesalers, traders, and suppliers including in logistics to help improve their cash flow, reduce financing costs and promote business growth. This financing programme offers up to RM 10 million of funding over the financing tenure of 7 years to SMEs that fit their eligibility criteria.

Prospective SMEs in Malaysia should meet the current definition of SMEs as issued by SME Corp Malaysia and be registered with the Companies Commission of Malaysia (SSM). Shareholders of the company should also consist of at least 60 per cent Malaysian Bumiputeras residing in Malaysia, managed by a Bumiputera Managing Director of CEO, and made up of a Bumiputera-majority higher management personnel. Further details on the financing programme and application process can be found here.

  • In collaboration with RHB Islamic: FSC Programme 

Alternatively, TERAJU also offers a Financing Supply Chain programme with RHB Islamic to help with working capital for post-financing, specifically for companies that have obtained contracts with Government Agencies, Government-Linked companies, and other selected companies agreed upon by the programme’s Implementing Agency. Bumiputera companies need to meet a minimum of 2 years of operations and a minimum of 1 year of relationship with the Principal company which issued the contract. Similar eligibility criteria apply, such as a minimum of 60 per cent of Bumiputera shareholders, and led by a Bumiputera Managing Director or CEO. Find more information on the programme here.

  • In collaboration with Exim Bank: BFF Programme for Bumiputera Exporters

Exim Bank, known for export-import financing matters, is working together with TERAJU for their Bumiputera Financing Frontier (BFF) Programme, assisting Bumiputera companies in their export-import projects, trade instruments, working capital and more, with a varied financing limit dependent on customer’s credit assessment with the bank. Other than similar aforementioned Bumiputera criteria, the applying company must be registered with the Malaysian External Trade Development Corporation (MATRADE), be export-ready or have engaged in export activities before financing application. Apply here or find out more about the eligibility criteria here.

CRADLE’s CIP SPARK and CIP SPRINT

Cradle Fund Sdn. Bhd., incorporated under the Ministry of Finance Malaysia (MOF), is a hub for SMEs in Malaysia especially ones in their early stages as the company helps to fund tech startups with high potential. Presently, Cradle is administered hand-in-hand with the Ministry of Science, Technology and Innovation (MOSTI), providing two main funding streams, CIP SPARK and CIP SPRINT.

  • CIP SPARK

CIP SPARK is a funding programme targeting tech SMEs in Malaysia for the development of ideas and Minimum Viable Product (MVP) as well as other pre-commercialisation activities. The funding covers up to RM 150,000 in the form of a conditional grant for early-stage development as well as product commercialisation. Recipients are also supported with networking opportunities and other services to help with business development. Applicants may apply as individuals or as companies (as PLT, ENT or SDN BHD) as long as the company is less than 5 years old at the time of application with an accumulated revenue of less than RM 3 million. Companies must also be Malaysian-owned, or made up of a majority of Malaysian employees. 

  • CIP SPRINT 

On the other hand, the CIP SPRINT fund focuses on the commercialisation of innovative technology products and services whereby the funds will be used to assist technology startups at an early stage in developing and commercialising their products in the market. This fund grants up to RM600,000, along with similar perks as the CIP SPARK recipients. For this grant, applicants will need to apply as a Sdn Bhd of under 7 years, with an accumulated revenue of not more than RM5 million. This grant also requires a minimum paid-up capital of RM10,000.

For a more detailed description of eligibility criteria and how to apply, visit https://cradle.com.my/cip-spark/ 

SMEs in Malaysia

 

Applied Innovation Fund (AIF)

Other than that, MOSTI also provides the AIF Fund Scheme, which is a fund focusing on increasing the participation of innovators in commercial activities. The scope of funding includes various activities such as pilot plant development, market studies, and IP acquisition amounting to RM500,000. To qualify, projects must be implemented in Malaysia by companies registered under the SSM or any authorised local authorities recognised by the Government. This fund only applies to Malaysian-owned enterprises or companies with a minimum of 70 per cent Malaysian employees operating in Malaysia. Full details of the grant can be found on MOSTI’s website.

Business Start-Up Fund (BSF)

The Business Start-Up Fund (BSF) is administered by the Malaysian Technology Development Corporation (MTDC), a strategic investment company with professional experience in technology transfer and commercialisation for SMEs in Malaysia. The BSF programme was established to fund scalable early-stage tech-based companies through loans and equity, and flexible funding via interest-free Convertible Promissory Notes (CPN) and/or Preference Shares. The grant provided by BSF has a limit of RM5 million or 90 per cent of the total project cost, whichever is lower, to be repaid over 5 years with an 18-month grace period. Visit their website for more details on chargeable fees and eligibility. 

MDV Liquidity Financing for Tech Startups (LIFTS)

Managed by Malaysia Debt Ventures (MDV), which serves high-impact and technology-driven sectors such as Green Technology, Biotechnology, Startups and more, the LIFTS grant limit is up to RM2.5 million to fund business expansions as well as working capital. As MDV’s niche is to provide project and financing facilities to young companies, they also provide nurturing and advisory services on top of market expertise to ensure project success tailored to their client’s needs. Malaysian technology startups backed by venture capital companies and government agencies will be given priority for this financing programme, but Malaysian-owned tech startups are welcome to apply. Read more here.

Service Export Fund (SEF)

The SEF is a part of the funding programmes offered by MATRADE, which stands for Malaysia External Trade Development Corporation. MATRADE is responsible for overseeing Malaysia’s exports to the world, including the promotion and assistance in exporting manufactured goods, and serves as the hub for exporters’ development, and the promotion of export activities, as well as providing training, support and updated information for Malaysian exporters. This fund in particular focuses on Malaysian Service Providers (MSPs) and SMEs in Malaysia to expand overseas and provides reimbursable grants of varied amounts based on activities undertaken, such as:

  • Activity 1 (RM50,000)

Promoting Malaysian expertise as a provider of services at international events held overseas, such as a speaker/panellist/moderator at conferences/forums/workshops/seminars; Or As a participant in an international competition for the services industry held abroad.

  • Activity 2 (RM50,000)

Travelling expenses to international Activity destinations for tender bidding; Or  Purchasing tender documents for projects overseas.

  • Activity 3 (RM100,000)

Conducting presentations to potential clients for assessing business and projects overseas.

The full list of activities covered by the grant relevant to SMEs in Malaysia can be found in this document. For further information on the eligibility criteria and application period, visit the SEF website.

Special funding for female entrepreneurs from SMEs in Malaysia

In order to level the playing field and help female entrepreneurs reach new heights and compete with their peers, the government has also worked with several banking and financial assistance organisations to offer additional funding for female-owned businesses.

Maybank’s SME Women Entrepreneur Financing

Eligibility

A Malaysian women-owned registered company

  • For Sdn Bhd, Limited Liability Partnership (LLP) & Partnerships: At least 51% shareholding held by women
  • For Sole-Proprietorship/ Professional: 100% owned by women

TemanNita Financing Scheme by TEKUN

Eligibility

  • Bumiputera and Female
  • 18-60 yrs old
  • Must be running a viable or potentially viable business venture
  • Possess a valid license/permit/business registration (SSM)
  • Existing business financing with other financial institutions does not exceed RM50,000

DanaNITA by MARA

Eligibility:

  • Malaysian citizen and Bumiputera
  • Aged between 18-60 years old.
  • Have gained enough experience/knowledge in the ventured business
  • Operate a full-time business
  • Have been operating the business for at least six (6) months
  • Possess an active savings account for at least six (6) months
  • Engaged in a Syariah compliance business
  • Not a MARA-blacklisted individual

Also read: Secretes for successful PR in Malaysia.

Additional financial help for SMEs in Malaysia based on Budget 2024:

  • Business loan facilities for MSMEs

Approximately a total of RM44 billion is planned to be provided via loans and financial guarantees to support SMEs in Malaysia in the next financial year, along with RM2.4 billion for small loan facilities to microentrepreneurs and small traders through selected financial agencies

  • SME funding under Bank Negara Malaysia (BNM) 

BNM will also allocate an independent fund of RM8 billion in loans to support SMEs this year, RM600 million of which will be specifically dedicated to helping micro-enterprises, low-income entrepreneurs, small contractors, sustainable businesses, and those operating in food security-related sectors.

  • Special facilities for microentrepreneurs with disabilities

BSN will provide a specialised financial assistance initiative, with a budget of RM50 million, tailored for micro-entrepreneurs who have disabilities. This program aligns with the government’s broader objectives to protect the well-being and enhance the self-reliance of individuals with disabilities (OKU).

This summarised list of grants for SMEs in Malaysia only grazed the surface of how the Malaysian government focuses its efforts on creating the perfect launchpad for innovative and high-potential startups and SMEs in Malaysia. Through a diverse range of initiatives, the government displays its commitment to increasing the competitiveness of its local enterprises as SMEs in Malaysia continue to display their budding potential.

If you are curious to learn more about financial aid and grants for SMEs in Malaysia and keen on understanding how Public Relations for Malaysian SMEs can help you achieve these goals, reach out to us at hello(a)syncpr.co.



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