THE number of loans to small and medium-sized enterprises has grown significantly and now makes up almost half of banks' outstanding borrowings.
The first quarter of this year witnessed sustained high levels of SME financing disbursements by banks and Development Financial Institutions (DFIs), surpassing the pre-pandemic quarterly trends.
This continued lending by banks has been made possible through a combination of accommodative policy measures and regulatory flexibility implemented by the central bank.
The prudent risk management practices adopted by banks over the years have further facilitated their ability to provide financial support to SMEs.
RM176 million will be provided to businesses to upgrade business facilities, including premises under Mara, Kuala Lumpur City Hall, Perbadanan Usahawan Nasional Bhd and UDA Holdings Bhd.
Recognising the persistent cost pressures faced by businesses, banks have remained steadfast in their commitment to support SMEs' working capital financing needs.
In addition to traditional bank financing, credit guarantees provided by Syarikat Jaminan Pembiayaan Perniagaan Bhd and Credit Guarantee Corporation Malaysia Bhd have played a significant role in bolstering bank lending.
These guarantees have been particularly beneficial for SMEs lacking sufficient collateral or unable to provide any collateral at all.
The holistic and robust financing ecosystem in place provides SMEs with the necessary support beyond access to financing.
Avenues for debt management and resolution proved critical in the aftermath of the pandemic, which provided immediate financial relief and ensured borrowers can sustainably service their loans over the longer term.
SME borrowers with financial constraints can seek help through a tailored approach under their own banks or through Agensi Kaunseling dan Pengurusan Kredit.
Banks have also reiterated their ongoing commitment to help borrowers, especially SMEs, who may face increasing difficulties in meeting debt obligations following the overnight policy rate increases.
2023 Budget: Lower taxes, more facilities and loans for small businesses
In an environment where businesses continue to face cost pressures, the governent has remained supportive of working capital financing needs in its 2023 Budget.
One of the key highlights of the budget is the significant reduction in taxes on the first RM150,000 of revenue of micro, small and medium enterprises (MSMEs) to 15 per cent, from 17 per cent.
With lower tax rates, these enterprises can retain more of their earnings, enabling them to save up to RM3,000.
Furthermore, the government had allocated RM50 million to build 3,000 stalls and kiosks for small traders nationwide.
In addition, RM176 million would be provided to upgrade business facilities, including premises under Mara, Kuala Lumpur City Hall, Perbadanan Usahawan Nasional Bhd and UDA Holdings Bhd.
Government agencies would provide up to RM40 billion in loan facilities and financing guarantees for MSMEs.
Bank Negara's fund for SMEs
Bank Negara's fund for SMEs complements bank lending by providing financing to SMEs at a reasonable cost through participating financial institutions.
The fund targeted specific sectors that require more support to weather the impact of the pandemic and to recover, with significant financing approvals to SMEs during the economic recovery phase.
New financing initiatives for SMEs post-pandemic
Apart from the targeted facilities under Bank Negara's Fund, social finance is a key emerging feature in the Malaysian financing landscape post-pandemic.
In 2020, Bank Negara launched iTEKAD, which is a blended financing programme offered by participating financial institutions that combines seed capital, microfinancing as well as structured training and mentorship.
The programme crowds in social finance funds including zakat, cash waqf, donation and social impact investment towards entrepreneurship development for the low-income segment.
Source: https://www.nst.com.my/news/nation/2023/08/939674/lower-taxes-more-facilities-and-loans-small-businesses