A business loan is specifically intended to set up a business or expand an existing one. As with all loans, a business loan also involves a debt creation, which is repaid with interest. Many Malaysian banks provide competitive business loans to help entrepreneurs grow their business and optimise their profitability. Read on to find out more about business loan.
Features & Benefits
The following list comprises of the common features and benefits of business loans:
- The loans have very simple documentation requirements.
- The loans can be repaid in affordable monthly instalments.
- The loans offer competitive interest rates.
- The business loans have higher finance margins.
Documents required to apply for Business Loan
The following documents are required to get a business loan:
For Partnership and sole proprietorship
- Form D (Register of Business)
- Last three years management account submitted to Income Tax
- Last six months bank statements
- Latest debtors and creditors ageing
- A copy of NRIC of owners
- Company profile, product catalogue, certification
- A copy of Bank Offer Letter from other banks
- The land title of the property which will be pledged to the bank
For SDN BHD (public company)
- Form 24, Form 49 and the latest annual return
- Last three years audited accounts and latest management accounts
- Last six months banks statements.
- Latest debtors and creditors ageing (if any)
- ICs of directors of director
- Company profile, product catalogue, certification and other relevant information
- A copy of Bank Offer Letter from other banks
- A copy of Land Title of the property which will be pledged to the bank
Banks offering Business Loans in Malaysia
The following banks offers business loans in Malaysia:
This bank offers both conventional and Islamic business loans at competitive rates, minimal administrative and documentation costs, as well as fast turnaround time. Some of the prominent loans that this bank offer are:
Equipment Financing: This loan is usually used for machine/equipment acquisition, procurement of any equipment for construction, printing, material handling, food and beverage, transport, and many other industry sectors. The equipment financing rates offered by Alliance Bank is fixed for the whole term/period of the facility. This allows businesses to better manage if there is an increase in Base Lending Rate (BLR). Currently, BLR is fixed at 6.67% p.a.
- Some of the key features of this loan are high finance margin, longer repayment period of up to five years, periodic instalments, LC (letter of credit) to ease the import of equipment, and lesser documentation procedure for loan size up to RM1.5 million.
General Working Capital: This type of loan has myriad requirements – from buying stock to managing overheads, and other business related purposes. Some of its main features are term loan, overdraft, and revolving credit.
Business Premises Financing-i: This Shariah-compliant financing facility provided by Alliance Bank is mainly used for acquisition and refinancing of commercial property. The key features include financing tenure up to 25 years, high finance margin, daily rest profit that helps business owner to save interest etc.
General Working Capital-i: Alliance Bank offers this loan facility for commercial, industrial and residential property development projects. A bridging financing helps to bridge the builder’s cash flow to ensure the continuation of the development project till completion.
RHB Bank Berhad:
This bank offers different types of business loans that are easily accessible and are offered at very competitive interest rates. Some of the prominent loans that this bank offer are:
BizPower SME Business loan: This loan is solely for working capital purposes and is easily accessible across 27 Commercial Banking Business Centres in Malaysia. The loan amount is up to RM2 million and the tenure is five years. This loan is given to Malaysian-controlled or Malaysian-owned businesses that have been operational for a minimum of two years.
BizPower SME Property Loan: This loan is for the purchase/refinance/re-mortgage of completed and under construction properties. The benefits of this loan include 90% finance margin for up to 25 years, no processing fees, and is easily accessible. The loan amount is a minimum of RM100,000 up to a maximum of RM10 million. This loan is given to Malaysian-controlled or Malaysian-owned businesses that have been operational for a minimum of two years. The age cap for guarantors is 70 years old upon maturity of loan tenure. The loan tenure is for a minimum of 5 years and a maximum of 25 years for commercial and residential properties.
BizPower P.I.N.T.A.S: This SME loan is for working capital purposes without collateral. The loan amount is a minimum of RM100,000 and a maximum of up to RM500,000. The loan tenure is a minimum of 1 year and a maximum of 5 years.
BizPower Equipment Loan: This loan is given for any acquisition of equipment for industrial or business purposes. The loan amount is RM50,000 and the tenure is from 18 to 60 months.
This bank offers the following funds to business owners:
Fund for Small and Medium Industries 2 (FSMI2): This is to help SMEs and SMIs in export and domestic oriented sectors. Manufacturing and services sectors are eligible to apply for this loan. The loan amount that the applicants can opt for is a minimum of RM50,000 and a maximum of RM3 million. The repayment period of this loan is 3 years from the date of first drawdown. The interest rate of this loan is 5.0% p.a.
New Entrepreneur Fund (NEF): NEF is a government-aided fund that can be used to enhance the growth of small and medium-sized Bumiputra enterprises and to encourage business ventures with established corporations. The maximum loan amount is RM5 million for 8 years at an interest rate of 5.0% p.a.
Q. How does a Term Loan help businesses?
A. A Term Loan is a fixed amount of loan that is granted for an agreed time period and is repaid in fixed instalments. With fixed repayments, businesses can better manage the cash flow effectively.
Q. What is the general eligibility criteria for a business loan?
A. The following is the eligibility criteria to get a business loan in Malaysia:
- Malaysian-owned business entities.
- There should be no adverse credit history of the applicant.
- For sole proprietorship or partnership, the age limit should be between 25 and 65 (upon full repayment).
Q. How to apply for business loans in Malaysia?
A. There are two ways to apply for business loans in Malaysia. They are mentioned below:
- The loan applicant can visit the nearest branch of the bank they wish to borrow from and request for the loan application. they must submit the duly filled application form along with the required supporting documents.
- The applicant can also visit the bank website and apply for the loan online. Applicants must complete the online application form and submit the required documents. Upon successful submission of the form and documents, a bank representative will contact them to take the process forwards.
Q. What is the maximum limit of shareholders' funds in FSMI2?
A. All SMEs with shareholders' funds not exceeding RM10 million are eligible for FSMI2.
Q. What are the different facility types available in business loan?
A. Generally, a business loan has the following facility types:
- Term Loan
- Trade Lines