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As the Malaysian government increases its efforts to support the development of small and medium-sized enterprises, you will find it easier to access loans from bodies such as Governmental Financial Institutions, Commercial Banks and Finance Companies. For a comprehensive listing of all the available organizations involved in giving loans, as well as a summary of what they do or do not provide, please visit the loan section of the SME Information and Advisory Centre at www.smidec.gov.my

Debt Financing

Debt financing refers to what we normally think of as a loan; a creditor agrees to lend money to a debtor in exchange for repayment, with accumulated interest, at some future date. Debt financing is attractive as a company does not have to sacrifice any ownership interests in their business, interest on the loan is deductible, and the financing cost is a relatively fixed expense.

The types of debt financing available include

• Bank loans
• Asset-based financing
• Leasing
• Trade Credit
• Life insurance

iGuarantee is an e-business venture of the Credit Guarantee Corporation (CGC). It enables business loan applications via a one-stop web services portal. CGC was established with the objective to assist Small and Medium Scale Enterprises (SMEs) with or without inadequate collateral to access credit facilities from financial institutions.

SME Bank
You may want to have a look at the "Special Funds" option of the SME Bank' s Strategic Products section for Start-Ups. SME Bank is now offering SMEs an opportunity to be matched to development funds and programmes that are being channeled through the bank. The main criteria are the viability of the business idea and how that idea can effectively be translated into a business plan to produce, commercialize and market to identified local or international markets. Visit the website at www.smebank.com.my/start-up.asp to find out more.

Bank Simpanan Nasional
The government has indicated that Bank Simpanan Nasional will be transformed into a specialised micro-finance institution to offer loan packages to micro-businesses. Bank Kerjasama Rakyat Malaysia and Bank Pertanian Malaysia will also provide micro-financing for agriculture and agro-based businesses. This will qualify micro-businesses, defined as a business having 5 or less employees, for loans of up to RM50,000. To get the latest update on this, please refer to the Bank Negara Malaysia website at www.bnm.gov.my

1. Get help before you start bank shopping
Visit information rich portals such as www.smecorp.gov.my or www.technopreneurdevelopment.net.my. They know the ins and outs of approaching lenders as well as investors and can help you avoid the pitfalls that most startups fall into.

2. Know what lenders are looking for
You've got to be prepared with the information your lender needs in order to make a decision in your favor. Lenders typically evaluate four key factors: previous business experience, ability to repay the loan, collateral and personal guarantee, and character. Prepare your documents thoroughly - include your business plan, balance sheet, cash-flow statement, income statement, personal financial statements, personal and business tax returns, and a description of the terms and loan amount, including how it will be used, secured and repaid.

3. Give them your business
Show your lender that you are a good risk. Move your personal and business accounts to the bank, so that they can evaluate how you manage your money. This will also give you a chance to check the bank's loan policies and gather up the forms before you get started.

4. Bankers are people too
Get to know your bank's staff including the tellers, loan officers and other employees.Taking the time to get to know your bankers is important in demonstrating your "character" to your lender.

5. Don't do it alone
It's time to make your pitch. Be sure to practice your presentation and take one of your mentors with you; someone who is a respected and trusted community business leader. He or she will be invaluable when meeting with your loan officer and can help you in negotiations. Your lender will feel more confident if you have a trusted community business leader with you.

6. If at first you don't succeed?
Many entrepreneurs get turned down for funding - some more than once before they succeed. Don't give up. Consult with your mentors as well as organizations, such as www.smebank.com.my, that are dedicated to helping start-ups gain their footing. Meet with other banks. In the end, banks want your business and will work with you to find a solution.

(Source: "60-Second Guide to Getting a Loan" at www.allbusiness.com)

Malaysia VSAT Satellite Broadband|Business Broadband|Internet Services Provider