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Borrowing from financial institutions is one of the common ways for SMEs to obtain funding for their business. Here is our guide on various aspects of lending to facilitate SMEs in the lending process.
 
Related Information

Prepare a business plan for loan application

Wealth management for SMEs

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  Each financial institution would have different loan application forms and loan application checklists. However most financial institutions require similar documents for verification and evaluation. The following table lists the documents required (depending on the type of company established) for loan applications.  
     
   
     
 
       
 
Documents for Corporation
   
Memorandum and articles of association
Certificate of incorporation (Form 9)
Return of allotment of shares (Form 24)

Return giving particulars in register of
directors, etc. (Form 49)
Photocopies of directors'/guarantors’ IC
Form J of directors/guarantors
Documents for Partnership and Sole Proprietorship
   
Business registration
Business licence
Income tax returns of the business

Form J of partners/proprietor
Photocopy of IC of partners/proprietor
 
 
     
  Financial and Management Documents  
     
 
3 years audited (certified by auditors for non corporations) accounts
6 months current account statements of other financial institutions
Disclosure of all borrowings with other financial institutions together with letters of offer
Statement of loans repayment/trade facilities utilisation from other financial institutions
Business and cash flow projection
Major suppliers and buyers list
Ageing lists of business creditors and debtors
Company profile/business plan/director's profile
Latest management accounts
Feasibility report (for project financing and new ventures)
 
     
 
       
  Other Relevant Documents    
       
 
Security Documents
   

Copy of relevant sale and purchase agreement
and relevant land title proposed as collateral
Documents showing proof of ownership of
other collateral proposed
Relevant valuation report
Other Documents
   
Contracts at hand/letter of awards
Documents to prove other sources of income
Information on related business entities
Invoices and commercial documents
Completed contracts and potential contracts
Bank borrowings of the group
 
 
     
     
     
   
  There are 3 broad stages in the loan application process namely:  
 
Preparation of a business plan
Submission of loan application
Assessment of loan application
 
     
  Once a business plan is prepared, you will need to submit your application along with the relevant documents required. This is then followed by an interview by the financial institution as a way of verifying and assessing your financial position better. Your application will then be assessed further based on the 5Cs which is character, capital, capacity, condition and collateral.  
     
  Below is a summary of the loan application process for SMEs:  
     
   
     
     
   
  As a borrower, it's your responsibility to manage your business efficiently and repay your loans on time. Here are some steps to help you maintain good conduct as a borrower:  
     
  Maintain your accounts well  
     
       - Ensure that you do not exceed your limit for overdraft facilites  
       - Ensure there are no incidences of returned cheques due to insufficient funds  
       - Ensure all business collections are credited to your bank account  
     
  Ensure your monthly repayments are paid promptly
  
     
       - Set aside sufficient funds to repay monthly instalments  
       - Avoid late payments  
     
  Ensure that your business is efficiently managed  
     
       - Monitor and manage the cash flow, stocks, trade debtors’ and creditors repayment period.  
     
  Ensure proper utilisation of the funds
  
     
       - Use the funds soley for business purposes and not for personal use  
       - Use the funds as stated in the letter of offer i.e. term loan for purchasing properties or fixed assets  
       - Use the funds for the intended business and not for related companies’ use.  
     
  Submit yearly audited financial statements to your banking institution  
     
  Update the financial institution on any changes in business  
     
     
  As a borrower, you have the rights to:  
     
 
Have access to all information that would affect your borrowing decision
Be treated professionally, courteously and without prejudice
Have accurate information on a regular basis on your loan account
Enforce legal action in the event of a breach of contract
 
     
     
     
   
 
The Malaysian government has developed a comprehensive set of programmes targeted at SMEs through various ministries and agencies. These programmes are aimed at providing the proper assistance and advice for SMEs in areas of financial assistance and business support services.

More information about these programmes can be found on SMEinfo, Malaysia's one-stop information portal for small and medium enterprises.		  
 
     
     
   
  Bank Negara Malaysia had established the Small Debt Resolution Scheme to assist SMEs constrained by non-performing loans by facilitating their request for restructuring of loans and arranging for new financing, if necessary. Under this scheme, a Small Debt Resolution Committee (SDRC) will conduct independent assessments on the viability of the businesses, loan restructuring and financing requirements of applicants.  
     
  If you want to apply for this facility, you need to use a standard SDRC application form which can be obtained from:  
     
 
Participating financial institutions
ERF Sdn Bhd
The SDRC Secretariat at Development Finance and Enterprise Department (DFE), Bank Negara Malaysia.
 
     
  You are also required to attach additional information such as those relating to your financial position and management to support your application. The completed forms can be submitted back to these institutions.

For further information on the Scheme, log on to the SMEinfo portal or contact the SDRC Secretariat at the following address:

SDRC Secretariat
Development Finance and Enterprise Department
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur

Tel: 03 - 2693 2330, 03 - 2691 6539 & 2691 - 3764
 
 
 
  Download
here		 For more information on the application process, you may download the booklet on "SME-Your Loan Application and Financing Needs" or visit our FAQ section for help on your queries.