SME Bank Special Initiative worth RM900 Million Help Boost SMEs Businesses

SME entrepreneurs will have the opportunity to increase their participation in national development activities on a larger scale through equity and quasi-equity funding initiatives worth RM600 million led by SME Bank in collaboration with TERAJU and Bank Simpanan Nasional as announced during the recent Budget 2022 presentation by the Minister of Finance.

In addition, SME Bank will also allocate funds worth RM200 million under the IBS Promotion Fund (IBS 2.0) initiative and RM100 million under the Young Entrepreneur Financing (YEF2.0) program to continue helping the targeted groups grow their businesses and ensure they are not left behind in the post COVID-19 redevelopment phase.

Minister of Entrepreneur Development and Cooperatives, YB Tan Sri Noh said, “The initiatives under the Budget 2022 involving SME Bank is a testament to the importance of the function played by the Bank as the Development Financial Institution (DFI) that is directly involved in the national development agenda.”

Group President/Chief Executive Officer SME Bank, Aria Putera Ismail, said, “SME Bank welcomes all the initiatives announced during the presentation of Budget 2022 and we are ready to implement the mandate entrusted to us, which is to nurture and develop the SMEs.”

While the Government’s efforts to provide various financing relief and assistance under PENJANA and PEMULIH are commendable, SMEs continue to face cash flow constraints due to the ongoing pandemic and the extended Movement Control Order.

The long-standing need to strengthen capital structures and to decrease dependency on borrowings have become more urgent as many SMEs are obliged to increase leverage in order to survive and forge a revival post-Pandemic. However, certain segments of the SMEs are not able to obtain further financing especially due to their weak balance sheet and gearing levels.

It is therefore necessary to broaden the range of fund raising options available to SMEs and entrepreneurs, in order to enable them to continue to play their role in investment, growth, innovation and employment.

Through the equity and quasi-equity funding program, SME Bank will provide facilities in the form of equity injection financing led by SME Bank in collaboration with TERAJU & Bank Simpanan Nasional (BSN) with fund amounting to RM600 million and investments of up to RM5 million per SME for a period up to 5 years.

The second initiative is the IBS Promotion Fund (IBS 2.0) worth RM200 million which will see SME Bank offering financial assistance to eligible contractors up to the G7 category, manufacturers and assemblers in the IBS industry. Funding is in the form of working capital requirements; procurement of machinery/equipment/factory; and/or factory renovations with total financing of up to RM10 million per SME.

A fund worth RM100 million is also offered by SME Bank under the Young Entrepreneur Development Program (YEF 2.0) which will assist and support the development of young SME entrepreneurs aged between 21 to 40 years. This financing can be used for the purpose of working capital requirements and acquisition of business assets. The total financing is up to RM1 million with a profit rate of 5.0% per annum.

Budget 2022 also provides indirect opportunities for SME Bank to work with various entities to assist the SMEs. In particular, SME Bank will work closely with BNM to assist SME entrepreneurs through funds under its supervision such as the Business Recapitalization Fund (BRF) and the Low Carbon Transition Facility which worth RM1 billion each as well as existing funds worth RM11.2 billion such as the Targeted Relief and Recovery Facility, Automation and Digitilisation Fund, High Tech Facility-National Investment Aspirations and many more.

Apart from that, SME Bank also has the opportunity to be involved in other national infrastructure development projects and National Digital Chain (JENDELA) initiatives led by the Ministry of Health, Ministry of Education and Ministry of Defense total worth RM40.3 billion.

Since its inception in 2005 and until September 2021, SME Bank has approved financing worth more than RM38 billion to 20,543 SME entrepreneurs. Center For Entrepreneur Development And Research Sdn. Bhd. (CEDAR), a subsidiary of SME Bank, conducted various training modules and coaching sessions involving more than 62,000 participants. The new products announced during the Budget 2022 are expected to be offered to eligible SME entrepreneurs in early 2022. For more information on financial assistance and entrepreneurship development programs by SME Bank, please visit the website www.smebank.com.my and SME Bank’s official Facebook.