The COVID-19 outbreak and the resulting Movement Control Order (MCO) in Malaysia have caused businesses and small-and-medium enterprises (SMEs) to suffer from losses and cash flows issues.
Therefore, we have prepared this complete Malaysia SME Funding Guide 2020 that you can refer to on how to financially support your small-and-medium business.
The surveys of Recommend.my revealed that:
- 68.9% of SMEs experienced over 50% fall in business within 1 week after the Movement Control Order (MCO) started
- 80% of SMEs cited sales and cash flow as the main area affected by COVID-19
Meanwhile, The Edge Market stated that SMEs expect no cash inflow for at least 3 months due to the MCO.
To protect the economy and mitigate the impacts of COVID-19, a RM10 billion stimulus package for SMEs was unveiled on April 6 by Prime Minister Tan Sri Muhyiddin Yassin.
This is an additional stimulus package to the RM250 billion Malaysia’s Prihatin Rakyat Economic Stimulus Package (PRIHATIN) unveiled by Prime Minister earlier on March 27.
The PRIHATIN package has designated a RM100 billion loan to support Malaysian businesses.
Table of contents
- SMEs RM10 Billion Stimulus Package
- 5 Key PRIHATIN Initiative to assist SMEs
- Save your business from cash flow issues
- Axiata’s COVID-19 Assistance Program
SMEs RM10 Billion Stimulus Package
The additional RM10 billion are allocated in the following initiatives:
- Higher Wage Subsidies
- PRIHATIN Special Grant
- A Moratorium for Loan Repayments
- Abolishment of Loan Scheme Interest Rates
- Rental Relief
- Foreign Worker Levy Reduction
- Employment Negotiation Between Employers and Employees
- 30 Days Moratorium for Submission of Statutory Documents
- Extension of the Financial Statements Filing
1. Higher Wage Subsidies
The previously announced Wage Subsidy Programme on March 27 will be increased from RM5.9 billion by RM7.9 billion to a total of RM13.8 billion.
This programme, extended from the Employment Retention Program (ERP) is implemented by the Human Resources Ministry through the Social Security Organisation (Socso) as part of the PRIHATIN.
Employers who experience over 50% fall in revenue since January 1, 2020, will receive three months of financial assistance to retain their employees.
For every company with local employees earning a monthly salary of RM4,000 or below, the wage subsidies are:
- Companies with more than 200 employees: RM600/pax
*The maximum number of employees that a company is eligible to claim increases from 100 to 200 employees.
- Companies with 76 to 200 employees: RM800/pax
- Companies with 75 employees or less: RM1,200/pax
The assistance is for employers who registered with the Companies Commission of Malaysia (SSM) or local authorities before January 1, 2020, and are registered with the Social Security Organisation (SOCSO).
Employers who apply for the programme are required to:
- retain their employees for a minimum of 6 months including 3 months of receiving wage subsidies.
On the other hand, they are not allowed to:
- lay off employees
- instruct them to take unpaid leave for three months after the programme has been implemented
- deduct their salaries
To apply, you need to prepare the following documents:
- Name list of employee
- Bank account number (attach 1st page of bank statement)
- Business Registration Number (BRN). BRN is Company Number. Example: 1234560-X
- SSM Registration Cert such as Form 9 or Section 13 (CA 2016)
- Declaration PKU 50 Form; and
- For companies with more than 76 employees, supporting documents such as Statement of Profit and Loss and Revenue Report are required. These documents need to be verified by management.
The application deadline is September 31, 2020. You can submit your application via PERKESO.
Have more questions? Check out the FAQ below:
2. PRIHATIN Special Grant
The Government will establish PRIHATIN Special Grant which worths RM2.1 billion. A grant of RM3,000 will be provided to the eligible micro-enterprises.
The micro SMEs are required to register with Lembaga Hasil Dalam Negeri (LHDN) to be eligible for the grant.
The list of eligible micro SMEs will be provided by the local authorities and SSM to the government.
3. A Moratorium for Loan Repayments
Under the Money Lenders Act 1951 or Akta Pemberi Pinjam Wang 1951, the registered money lenders who provide credit facilities are urged to provide 6 months moratoriums to SMEs beginning April 2020, as provided by the banks.
4. Abolishment of Loan Scheme Interest Rates
The previously announced 2% interest rates of RM500 million Micro Credit Scheme administered by Bank Simpanan Nasional (BSN) in PRIHATIN will be abolished.
Furthermore, the soft loan scheme for micro-enterprises is also extended to TEKUN Nasional with a maximum loan limit of RM10,000 at a 0% interest rate.
Applicants are free to choose either one of these schemes. For more information, please click Micro Credit Scheme.
5. Rental Relief
For SMEs in the retail sector who operate on Government-Linked Companies (GLCs) premises, the rental will either be given discounts or waived.
For private premises, the owners who are willing to provide the same assistance to SMEs by reducing the rental rates will be entitled to additional tax reductions which equal the amount of rent deduction for April to June 2020.
The tax reduction is subject to the condition that the rental reduction is at least 30% of the original rental rate for that particular period.
6. Foreign Worker Levy Reduction
Do you have foreign worker in your company? Good news!
The foreign worker levy will be reduced by 25% for every company that has work permits that will expire in the period of April 1 to December 31, 2020.
However, the levy reduction is not applicable to the domestic help sector (eg: housemaids).
7. Employment Negotiation Between Employers and Employees
You are encouraged by the Government to negotiate with your employees about the employment terms which include:
- Pay cut options and
- Unpaid leaves during the MCO.
Both employers and employees can seek advice from the Department of Labour on any issues raised. The negotiations should be subjected to employment laws.
8. 30-Day Moratorium for Submission of Statutory Documents
As it is difficult for companies to submit statutory documents during MCO, the Government will grant 30-day moratorium from the last date of the MCO for companies to submit the statutory documents to SSM.
9. Extension of the Financial Statements Filing
The Government has agreed to extend the financial statements filing period of companies with financial year ended September 30 to December 31, 2019 for 3 months.
Companies have to apply for this extension at SSM. No fee will be imposed.
5 Key PRIHATIN Initiatives to assist SMEs
In PRIHATIN, before the additional allocation of RM10 billion, the Government and Bank Negara Malaysia provide RM4.5 billion in 5 key initiatives as listed below:
- Special Relief Facility (SRF)
- AES Facility Fund
- Micro Credit Scheme
- Credit Guarantee Malaysia Berhad (CGC) schemes – BizMula-i and BizWanita-i
- Syarikat Jaminan Pembiayaan Perniagaan (SJPP)
1. Special Relief Facility (SRF) for SMEs will be increased by RM3 billion to a total of RM5 billion. The maximum financing rate is lowered to 3.5% from 3.75%
According to Bank Negara Malaysia (BNM), SRF will support SMEs that are adversely impacted by COVID-19 or affected by the MCO with immediate and targeted cash flow to help them in sustaining their business and safeguard jobs.
To check whether you’re eligible to apply for SRF, you can contact Participating Financial Institutions (PFIs):
- commercial banks
- Islamic banks
- development financial institutions regulated by BNM
Whether you’re a new or existing SME customer of the PFIs, SRF is open to you.
In addition, you can apply multiple times with different PFIs but the total aggregated approved financing is capped at RM1 million per SME (subject to the assessments by respective PFIs).
For SMEs that are not affected by COVID-19, they can also apply for BNM’s funds:
- All Economic Sectors (AES) Facility
- Automation and Digitalisation Facility (ADF)
- Agrofood Facility (AF)
- Micro Enterprises Facility (MEF)
Here is a brief summary of SRF and BNM’s funds.
As the MCO limits our mobility, you can apply for financing online via imSME platform or visit the PFI’s website for online application. SRF is available until 31 December 2020.
Have more questions?
Visit Frequently Asked Questions (FAQ) for SRF and BNM’s funds for more information.
2. Funds for All Economic Sector (AES) Facility will be increased by RM1 billion to a total of RM6.8 billion to help improve SMEs’ access to financing
AES Facility supports SMEs to have better access to financing in all economic sectors, especially the underserved SMEs, and to support their growth. The maximum financing rate is also reduced from 8% p.a. to 7% p.a.
This facility is always available and open to all Malaysian SMEs.
3. Additional funds of RM500 million will be provided under the Micro Credit Scheme to a total of RM700 million allocated for soft loans
Administered by Bank Simpanan Nasional (BSN), the scheme is offered for micro-enterprises whose businesses are impacted by the COVID-19 at only a 0% interest rate (previously was 2%).
Instead of 1 year of operation, if your business has operated for a minimum of 6 months, you’re eligible to apply for the loans. Meanwhile, the maximum financing amount increased from RM50,000 to RM75,000 per entrepreneur.
Here are some important updates from BSN on April 10 on how you can apply the scheme:
Step 1: Check the list of BSN personnel information near you. According to BSN, you MUST contact BSN personnel in order to apply the Micro Credit Scheme.
WARNING: BSN does not appoint any representative or third party (external agent) for financing or loan application matters.
Step 2: Prepare the required documents as listed below:
a) Your Company Registration Certificate with SSM
b) A Copy of the Identity Card of all Directors/ Sole Proprietors/ Partners
c) Your Company Bank Statement for the Last 3 Months
d) Other Documents if They are Needed
Step 3: Process Your Application
Step 4: Your Application Result (Success or Fail)
Step 5: Payment for Successful Application
Click here for Bahasa Malaysia version.
Here’s the application form for the scheme.
Don’t worry if you have more questions, check out
4. SMEs with business records of less than 4 years are able to apply for BizMula-i and BizWanita-i schemes under Credit Guarantee Malaysia Berhad (CGC) for financing up to RM300,000
BizMula-i is a direct financing scheme for businesses that have less than 4 years of operations while BizWanita-i is a direct financing scheme specifically for women entrepreneurs with businesses less than 4 years of operations too.
Both of these funds aim to improve financing accessibility of viable SMEs and are used as working capital and/or asset acquisition.
To apply, you download the application form here for:
You can also visit any CGC branches and submit with the required supporting documents.
5. RM5 billion worth of guarantees will be provided by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) and the guarantee coverage will be increased from 70% to 80% for SMEs that have issues in getting loans
SJPP helps Malaysian SMEs in gaining access to financing from financial institutions.
The Government of Malaysia will guarantee or cover the financial institutions for the credit facilities provided to the SMEs of up to 80% coverage.
These are the 7 guarantee schemes offered by SJPP:
- Working Capital Guarantee Scheme (WCGS)
- Working Capital Guarantee Scheme – Start Up (WCGS-SU)
- Working Capital Guarantee Scheme – Bumiputera (WCGS-B)
- Working Capital Guarantee Scheme – Export (WCGS-X)
- Working Capital Guarantee Scheme – Women (WCGS-W)
- Automation & Digital Guarantee Scheme (ADGS)
- Special Schemes for COVID-19 (include SRF, ADF, and AF)
Wonder how to apply? No worries! Just follow these three simple steps!
1. Apply for credit facilities at any PFIs.
2. If you’re eligible, the PFIs (lenders) will provide financing facilities to you and submit scheme applications to SJPP.
3. SJPP will then evaluate your applications for guarantee schemes on behalf of the Government of Malaysia.
For more information, you can visit SJPP website.
Save your small business from cash flow issues
The Government also announced a number of initiatives to save business owners and SMEs from cash flow issues.
1. Employer Advisory Services (EAS) program
The Employer Advisory Services (EAS) program will be introduced by the Employees Provident Fund (EPF) on 15 April.
This service will benefit employers in cash flow savings at an estimate of RM10 billion and offers:
- delayed payments
- rescheduling of employer contributions
2. Exemption of Human Resources Development Fund (HRDF) Levy payments
Levy payments for the Human Resources Development Fund (HRDF) for all sectors will be exempted for 6 months beginning April 2020.
This initiative will help Malaysian companies’ cash flows with a total savings of RM440 million.
3. Postponement of Income Tax Instalment Payments
The income tax instalment payments to all SMEs will be postponed for 3 months beginning 1 April and 6 months for the tourism sector.
If you’re in the other affected sectors, you’re allowed to amend the tax amount income incurred in the third, sixth and ninth monthly instalments during the business period.
Axiata’s COVID-19 Assistance Program
Apart from the initiatives from our government, Axiata, Celcom and Boost have launched Axiata’s COVID-19 Assistance Program with RM150 million cash funds to provide financial assistance to micro-SMEs.
The financing amount ranges from RM1,000 to RM10,000 with a monthly interest rate of 0.5%.
The program also covers special insurance coverage to protect micro-SME proprietors and merchants with:
- emergency income
- accidental death
- COVID-19 assistance
The online application process takes less than three minutes.
Micro-SMEs with successful applications will receive the funding in 48 hours.
For more information about the programme, click here to visit Aspirasi.
If You’re An F&B Business Owner, You Must Not Miss This!
Since the announcement of the MCO, StoreHub has launched Beep Delivery to #SaveOurStores.
Partnering with Malaysia’s top logistics providers, Beep Delivery helps your restaurants or cafes to continue to serve your customers through food delivery or pickup.
If you have never done food delivery before, now is the time to get started on it.
More than 400+ cafes and restaurants in Malaysia are already using Beep Delivery to serve their customers.
“The common enemy we are facing may be invisible. But it is not unbeatable.” – Italian Embassy to Greece
Original article from : https://www.storehub.com/blog/malaysia-sme-funding-guide-2020/