The Government of Malaysia, through the Minister of Finance Incorporated, has formed a wholly-owned subsidiary called Syarikat JaminanPembiayaanPerniagaan (SJPP), which administers and disburses funds through existing financial institutions. There are nine working capital guarantee schemes in total, and one of the schemes is designed to meet the needs of Bumiputeras who need a business loan to help their private business survive the economic downturn.
The worldwide COVID-19 pandemic has made the timing of the availability of these loan schemes all that much more welcome. People who have carefully built a well-respected business in their community and have maintained an impeccable credit rating while building the business do not deserve to have their hopes and dreams because of something they had no control over.
Financial Institutions Need Backing as Well
One of the main problems with an economic recovery during a pandemic, is no one knows exactly how long it will take. For financial lending institutions, this is an extremely crucial issue. The officers of the lending institution have no guide to know where they should draw the line on lending, so most of them take a more conservative path out of self-preservation.
But a financial lending institution that isn’t lending also isn’t earning any revenue. This stalemate causes further depression in an already reeling economy. The Minister of Finance Incorporated saw the dangers of this potential situation and created the nine schemes as a safeguard against this vicious cycle.
By supporting the lending institutions instead of issuing funds directly, a business can continue doing business with a lender that they already enjoy a relationship with. These lenders also enjoy another source of funding in which to help their customers.
What are the Details of the Bumiputera Loan?
The Bumiputera applying for a loan under the SJPP WCGS-B scheme, must have ownership of 51% of the shares (or more) of the SME business shares. And be incorporated under:
- Registration of Business Act 1956
- Companies Act 1965, or 2016
- Limited Liability Partnership Act 2012
- Respective authorities or district offices in Sabah and Sarawak: or
- Respective statutory bodies for professional services providers
Once approved for the business loan, applicants can borrow a minimum amount of RM100,000 up to a maximum of RM3.0 Million over 15 years or until December 31st, 2035, whichever comes first.
The purpose of these loans must be for working capital or capital expenditure. The loan cannot be used to repay other outstanding loans. The loans can be issued in a number of facilities to suit the business owner’s needs, including term load/term financing, overdraft/Cash Line-I, trade facilities and Commercial Card.
For business owners reeling from the effects of the global pandemic, these loans can’t come at a better time. And for new business owners who launched their dream company shortly before COVID-19 became a reality, these loans can ensure that these SMEs have the chance to grow and become an asset to their communities.
For more information about these working capital guarantee schemes, please get in touch with your local financial lending institution or SJPP directly.