KUALA LUMPUR: Small-medium enterprises (SMEs) can 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 Bumiputera Agenda Steering Unit and Bank Simpanan Nasional.
In a statement today, SME Bank said it would also allocate 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 in the post Covid-19 redevelopment phase.
Entrepreneur Development and Cooperatives Minister Tan Sri Noh Omar said initiatives under the 2022 Budget involving SME Bank was a testament to the importance of the function played by the bank as the development financial institution (DFI), which was directly involved in the national development agenda.
SME Bank group president and chief executive officer Aria Putera Ismail said the bank welcomed all initiatives announced under the 2022 Budget, and would ready to implement the mandate to nurture and develop SMEs.
He said although the government's efforts to provide various financing relief and assistance under Penjana and Pemulih were commendable, SMEs continue to face cash flow constraints due to the ongoing pandemic and the extended Movement Control Order.
SME Bank said the long-standing need to strengthen capital structures and to decrease dependency on borrowings become more urgent as many SMEs were obliged to increase leverage to survive and forge a revival post-Covid019 pandemic.
However, it said certain segments of the SMEs were not able to obtain further financing especially due to their weak balance sheet and gearing levels.
"Therefore, it is 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 programme, SME Bank will provide facilities in the form of equity injection financing with RM600 million of funds and investments of up to RM5 million per SME for up to five years.
Meanwhile, the IBS 2.0 will allow SME Bank to offer 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."
Additionally, RM100 million worth of fund would also be offered by SME Bank under the YEF 2.0 to 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 cent per annum.
SME Bank said it would work closely with Bank Negara Malaysia to assist SME entrepreneurs through funds under its supervision such as the Business Recapitalisation Fund (BRF) and the Low Carbon Transition Facility, worth RM1 billion each.
It will also make use of the 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.
SME Bank also involves in other national infrastructure development projects and National Digital Chain initiatives led by the Health Ministry, Education Ministry and Defence Ministry with a total worth RM40.3 billion.
Since its inception in 2005 and until September this year, SME Bank has approved financing worth more than RM38 billion to 20,543 SME entrepreneurs.