KUALA LUMPUR, Nov 9 — The long-standing need to strengthen capital structures and to decrease dependency on borrowings have become more urgent as many small and medium enterprises (SMEs) are obliged to increase leverage in order to survive and forge a revival post-Covid-19 pandemic, said SME Bank.
In a statement today, the bank said, however, certain segments of the SMEs are not able to obtain further financing especially due to their weak balance sheet and gearing levels.
It was therefore necessary to broaden the range of fund raising options available to SMEs and entrepreneurs to enable them to continue playing their role in investment, growth, innovation, and employment, it added.
“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,” said group president and chief executive officer Aria Putera Ismail.
Under Budget 2022, the SMEs 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.
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) programme to continue helping the targeted groups grow their businesses and ensure they are not left behind in the post Covid-19 redevelopment phase.
The collaboration will also offer investments of up to RM5 million per SME for a period up to five years.
SME Bank said, under IBS 2.0, it will offer financial assistance to eligible contractors up to the G7 category, manufacturers and assemblers in the Industrialised building system 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, it added.
Meanwhile, a fund worth RM100 million is also offered by SME Bank under the YEF2.0, which will assist and support the development of young SME entrepreneurs aged between 21 and 40 years.
SME Bank said the financing can be used for the purpose of working capital requirements and acquisition of business assets with a total financing of up to RM1 million and a profit rate of 5.0 per cent per annum.
Since its inception in 2005 and until September 2021, SME Bank has approved financing worth more than RM38 billion to 20,543 SME entrepreneurs.
Its subsidiary, Centre For Entrepreneur Development And Research Sdn Bhd, has also conducted various training modules and coaching sessions involving more than 62,000 participants.
The new products announced under Budget 2022 are expected to be offered to eligible SME entrepreneurs in early 2022. — Bernama
