In the wake of the recent 2019 Budget presentation, the government is ready to propel Malaysia towards the Fourth Industrial Revolution (Industry 4.0) which is in line with the Malaysia National Policy as delivered by the Finance Minister, Lim Guan Eng.
Lim added that the government would allocate RM 2 billion under the Business Loan Guarantee Scheme (SJPP), where they will provide up to 70% incentives for SMEs to invest in automation and modernization as parts of the Industry 4.0 initiatives.
A part of the SME ecosystem, new hawkers too would be able to benefit from the new financial plan. The good news will definitely elevate the concerns of many new hawkers in finding fund to startup the business.
But do you know, just like SJPP, there are a number of ways for you to gain the initial capital without breaking the bank? Fortunately, we have listed out the 5 financial assistance that you can get as a hawker here in Malaysia.
1. Micro-credit Transformation Scheme Under The 1Malaysia Hawkers and Petty Traders Foundation (YPPKM)
Specifically established to cater to hawkers and peddlers, The 1 Malaysia Hawkers and Petty Traders Foundation (YPPKM) offers business loan under the Micro-credit Transformation Scheme. Eligibility requirement as per below;
- Malaysian aged between 18-60
- Has no record of bankruptcy
- Applicants must also have a minimum income of RM1,500 per month.
- A guarantor must also be present to support the application
The micro-credit loan amount available is from a minimum of RM30,000 to a maximum amount of RM50,000 with interest rate ranging from 12.3% to 20%. Loan tenure is between 3 to 5 years. Additionally, a 2% administration fee is also applicable.
Check out YPPKM official website here for more details.
2. PROSPER Runcit Under Perbadanan Usahawan Nasional Berhad (PUNB)
The Perbadanan Usahawan Nasional Berhad (PUNB) is established with the aim to increase the number and quality of Bumiputera entrepreneurs. Also, supporting them to get involve in the nation’s strategic economic by providing financial and corporate aids. Offering a number of business funding schemes, one of it, named as PROSPER Runcit would best suit the hawker business financial needs.
The PROSPER Runcit entails the following conditions;
- Shari’ah compliant financing products
- Financing from RM50,000 up to a maximum of RM1,000,000
- Financing exceeding RM300,000 is only for a Private Limited company. Exception only for petrol station businesses
- Payment tenure up to 10 years
- Corporate development and monitoring
- Training and entrepreneur development
While in order to be eligible for application, you have to be;
- A Bumiputera
- 18 years and above
- Possess strong entrepreneurial characteristics such as honesty, confidence, resilience, positive attitude, creativity and high level of self-discipline
- Must be able to finance at least 10% of the total project cost
- Favourable records with financial institutions
- Willing to work full time
- Willing to attend courses identified by PUNB
Check out PUNB official website here for more details.
3. TEKUN Niaga Financing Scheme Under TEKUN Nasional
Another institution offering financial assistance that you may want to try is provided by the Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN Nasional). There are two types of loan being offered:
- Small Loan Scheme (SPK) – Between RM10,000 to RM50,000 with payment period up to 5 years
- Medium Loan Scheme (SPS) – Between RM51,000 to RM100,00 with payment period up to 10 years
Upon loan approval, entrepreneur should observe the TEKUN Management Fund Contributions requirements where;
- Entrepreneurs are required to pay a total of 4% of the loan value per annum throughout the loan period. Payment of this contribution shall be made together with loan repayments.
- Required to pay minimal processing fees of 1.5% or lower from the loan amount applied.
- Entrepreneurs are required to make savings of 5% of the loan value per annum. These savings should be made together with the loan repayments.
Other perks of applying under TEKUN Niaga financing scheme is that you will be protected under the Loan Insurance and Life & Accident Insurance (borrower) set by TEKUN Nasional within the loan period.
Check out TEKUN Nasional official website here for more details.
4. Small Business Financing (SBF) Under SME Bank
Wholly owned by the Ministry of Finance and regulated by Bank Negara Malaysia (BNM), SME Bank is a leading Development Financial Institution that you might want to put into consideration. The Small Business Financing (SBF) scheme is particularly offered to increase your product marketability. Ultimately, transforming your business from micro to small category.
The main purpose of SBF is to aid in terms of your business working capital with details according to below;
- Loan amount from a minimum of RM100,000 to a maximum of RM750,000 with repayment period up to 7 years
- Applicant must be Micro Enterprise Company with minimum 51% Bumiputera equity ownership with good credit records
- Chief Executive Officer/Managing Director must be Bumiputera
- The company is in operation for at least 2 years and profitable in current year.
- Minimum turnover of RM150,000 (annual sales)
The margin of financing is set up to 100% with required profit rate at 7.5% per annum and additional collateral such as;
- 5% cash collateral
- Sinking Fund
- Joint and several or personal guarantees of directors/shareholders
Check out Small Business Financing (SBF) official web page here.
5. Business Accelerator Program (BAP) under SME Bank
Business Accelerator Program is another collaborative effort program with SME Corporation Malaysia with the objective of providing financial assistance to SMEs. It is to assist SMEs in strengthening their core business, building capacity and capability, and facilitating access to financing.
The main aim of BAP is for the purpose of funding initial fixed asset and working capital. If you are a new hawker, then this might appeal more to you. Why? Because it only requires you to operate for at least 6 months as compared to 2 years in SBF. Other required criteria to qualify are such as;
- Meet the SME definition
- SME Corporation’s SCORE 2 or higher
- The Company is at least 60% owned by a Malaysian
- Large enterprise ownership of not more than 20%
- Valid business (business license from local authority, valid business premise)
- Full time business operator
- The Company has been in operations for at least 6 months
The financing limit is between minimum amount of RM50,000 to a maximum amount of RM1,000,000 with tenure according to below;
- For fixed asset, it is up to 10 year plus inclusive of grace period up to 24 months
- For working capital, it is up to 7 years plus inclusive of grace period up to 12 months
The margin of financing is set up to 90% for fixed asset. While for working capital, it is up to 100% with required profit rate at 4% per annum. Other additional collateral are such as;
- Fixed asset to be financed
- Minimum 10% cash collateral for working capital financing
- Joint and several guarantees of directors/shareholders
Check out Business Accelerator Program (BAP) official web page here.
Start Applying Today!
In short, financial assistance is of abundance in Malaysia, it is just the matter of knowing how to source them. Once selected and approved, you are well on your way to spearhead a successful hawker business venture.
Be mindful to keep a close eye on your business expenditure and implement cost saving practice at all times. One way to do it is by getting you essential stocks at Dropee for wholesale price for instance.
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