In the past couple of years, the COVID-19 pandemic has wreaked havoc on the economies of countries worldwide, including Malaysia’s. But the hardships brought on by the pandemic have also taught us a valuable lesson: people can adapt to adversities and learn to make the best of any situation.
The government has recognised this character trait in the citizens of the country. To encourage this valuable quality and to help the economy recover faster, they introduced a series of SME Business Loans in Malaysia that help support the efforts of SMEs all across the country.
Taking Care of Your Resources
Although big business is still the foundation of the economy in most countries, economists are beginning to pay a lot more attention to the social and economic impact of the microfinancing trend around the world. This trend was said to have begun in India when someone noticed that women in small villages were supporting their families by renting out their cellphones to neighbours that couldn’t afford their own.
These enterprising women built small but financially viable businesses that steadily grew over time on the resources of their cellphones alone. When local financial institutions began loaning small amounts of money to these businesses, they began to employ other villagers as well and expanded into different types of business. The bankers discovered that the default rate was much lower for these women than for the larger business loan customers they primarily dealt with. They realised that the personal stake the women had in these businesses was the difference.
The SME business loans offered by the government of Malaysia are along the same type of business model. It’s empowering people to help themselves by providing guarantees on funds issued by commercial lenders.
How the Loan Schemes Work
These Malaysian SME business loans don’t come directly from the government, as that would hurt the commercial lenders at a time that nobody can afford to lose any business.
Rather, a government organisation has been set up called Syarkat Jaminan Pembiayaan Perniagaan Berhad (SJPP). SJPP is working with major banks and lenders in the nation to guarantee the loans issued under the Working Capital Guarantee Scheme (WCGS)
There are six types of these Malaysian SME business loans schemes under the WCGS banner. Each of them is aimed at different groups of people and different business models, although every type of scheme supports all sectors and industries.
There’s a basic WCGS scheme, as well as a scheme targeting startups, Bumiputeras, Women, exporters and automation and digital enterprises. Depending on which scheme you apply for, you can secure a loan for amounts from 50,000 to 10 million Ringgit.
Malaysian SME business loans will inject much-needed capital into a segment of the population that major lenders have long ignored. It provides hope for small business people that they can succeed even in the wake of the pandemic. Contact your bank to find out more about what the WCGS scheme can offer your small to medium business.
