Last Updated on March 12, 2023 by
If you’re one of the many entrepreneurs in Malaysia with an SME planning for business expansion this year, you might be considering applying for a loan or seeking other forms of financial assistance. One option to consider is the SME Fund Malaysia.
The government created this fund to help small businesses like yours access the funds they need to succeed. But before you start filling out loan applications, you must ensure you meet the eligibility requirements for SME financing.
Don’t worry though, we’ve got you covered! In this blog, we’ll go over the top five things you need to be eligible for SME financing, so you can get the financial support your business needs to thrive.
Table of Contents
Maximum Turnover
The government tries to ensure that any business financing for SMEs is only issued to small and medium enterprises instead of larger ones. This is why the government imposes a maximum annual turnover requirement for businesses.
Manufacturing businesses aren’t allowed to have a sales turnover exceeding RM50 million, while other businesses are only limited to an annual amount of RM20 million.
Limit of Number of Employee
SMEs cannot have more than 200 full-time employees to be considered an SME
Another measure put in place to filter out larger enterprises is by putting a limit to the number of full-time employees a business can employ.
Businesses applying for SME financing cannot employ more than 75 full-time employees. However, if you’re a business in the manufacturing industry, you will have more leeway. Manufacturing businesses cannot employ more than 200 full-time employees.
All paid workers that work at least 6 hours a day and 20 days a month (120 hours a month) are considered full-time employees. This includes foreign and contract workers and excludes working proprietors, unpaid family members or friends and anyone who doesn’t receive a regular wage.
This also excludes any temporary employees, as well as any contractors or freelancers who work for the business regularly.
Shareholding Requirements
There may be requirements regarding the ownership and shareholding structure of businesses that want to apply for an SME fund. For example, the business may be required to be majority-owned by individuals rather than by other companies.
There are shareholding requirements for businesses applying for SME financing. For example, public-listed companies and subsidiaries in any country’s main board are not considered SMEs. However, companies and their subsidiaries listed on secondary bourses in any country, such as Malaysia Online Trading Platform for Unlisted Market (MyULM), will be considered SMEs.
Any subsidiaries of large enterprises, Government-linked companies (GLCs), State-owned enterprises, multinational corporations (MNCs), and Syarikat Menteri Kewangan Diperbadankan (MKD) will not be considered SMEs. However, subsidiaries of an SME will be eligible.
Type of Establishments
The SME fund may only be available to certain types of business establishments, such as sole proprietorships, partnerships, or limited liability companies.
To be eligible for this small business financing, your company will need to be a pure business entity that is either locally incorporated under the Companies Act 2016, registered under the Registration of Business Act 1956, or Limited Liability Partnerships Act 2012 (LLP), or respective authorities from East Malaysia, or statutory bodies for professional service providers.
Eligible Sectors/Industries
Manufacturing, Services, Agriculture & Construction Are Some Of The Eligible Sectors For The SME Fund
The SME fund may only be available to businesses in certain sectors or industries, such as manufacturing, retail, or services. This requirement could be used to target specific economic sectors or to prioritize certain types of businesses.
Even if you have passed the criteria for everything above, you might still not be eligible for this business financing. The government only offer these funds to businesses in certain industries.
The government opens this fund to businesses in these industries:
Manufacturing: Manufacturing materials or components into new products through physical or chemical transformation.
Services: Includes all services such as ICT services, private education, entertainment, hotels and restaurants, distributive trade, private health, financial intermediation, and manufacturing-related services such as logistics and engineering.
Primary Agriculture: Agriculture of perennial crops, cash crops, logging, aquaculture, marine fishing, and livestock.
Construction: Special trade, infrastructure, residential, and non-residential.
Mining & Quarrying.
Grow Your Business With SME Fund Malaysia
While it may seem intimidating initially, remember that you’re not alone in this journey. There are countless resources available to help you navigate the world of financing. With a little bit of effort and determination, you can secure the funding you need to achieve your business goals.
So don’t be afraid to take that first step and find out more about the SME Fund Malaysia. You never know where it might lead! Just head over to one of Malaysia’s leading development financial institutions today and see how you can increase your working capital.
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