THANKS to Bank Negara’s intervention, some 35% of the more than 230 small and medium-scale enterprises (SMEs) that complained of difficulty gaining access to financing have good reason to cheer.
Corporate communications department director Abu Hassan Alshari Yahaya talked about the complaints received from these SMEs between October and January this year, 81% have been resolved.
For the resolved cases, 44% were in favour of the SMEs and involved restructuring and rescheduling of loans, and also approval of loans that were initially rejected.
The central bank will continue to monitor communications among banks and SMEs, he says.
He says Bank Negara receives about 700 complaints and enquiries from SMEs and the public every day on issues ranging from restructuring and rescheduling of credit line, delay in loan approvals, changes in credit terms, bank charges, credit card issues, funds for SMEs and credit report.
“We encourage banks to look closer into customers’ complaints. We give the banks a timeline (about two weeks) to respond to Bank Negara enquiries on what they are going to do about the complaints.
“While we are assisting SMEs, we also encourage SMEs to approach their banks early,” he says.
He adds that in processing SMEs loan applications, most banks find that SMEs have no track record and provide insufficient information.
Meanwhile, he suggests the smaller SMEs consider special funds that cater for them, which come with lower interest rates.
For example, the Fund for SMEs 20 is based on revolving loan charges between 4% and 6% interest rate per year. The fund still has RM280mil available.
The new Entrepreneurs Fund 2, which also offers 4% to 6% interest rate per year, has RM270mil available for new SMEs without an established record.
These loans are available at commercial banks.
United Overseas Bank (M) Bhd head of business banking division James Seow concurs that the most common problem faced by banks is insufficient information provided in the application.
“To avoid any inconvenience, we advise all applicants to work closely with their respective bank’s relationship managers. Financial health is integral to the success of SMEs’ loan application,” he tells StarBizWeek in an e-mail interview.
The general loan application requirements include having a business that has been operating for at least three years with an annual turnover of RM20mil and less, he says.
Seow says SMEs are the bank’s main target segment.
“We are now more aggressive in assisting our SME customers by customising loan packages to suit their business financial needs. The government guarantee will definitely help the bank mitigate some of the business risk,” he says.
According to Seow, the base lending rate remains the same for SME and corporate loans. The difference in interest rates is due to the loan amount, customer’s risk profile and the rates recommended by Bank Negara.
SMI Association of Malaysia president Chua Tiam Wee says the reversal in banks’ decision on financing facilities for SMEs is encouraging news to the industry in the current economic slowdown.
He says the association, which has been bringing SMEs’ financing issue to Bank Negara, has in the past few months held several dialogues with the central bank on the challenges faced by SMEs.
Chua urges SMEs to use the Bank Negara-initiated portal www.smeinfo.com.my as an avenue to air their problems and concerns.
The portal is a one-stop Web-based SME resources centre that contains the profiles and contact details of SME business advisers in the various government agencies, commercial banks and development financial institutions.
Meanwhile, the Association of Banks in Malaysia executive director Chuah Mei Lin assures the SMEs that bankers are not just fair weather friends, as banks fully appreciate the collaboration and partnership with customers in times when businesses contract.
“SMEs must themselves be active participants in raising capital and it is important that they demonstrate adaptability to change.
“Banks are also proactively managing their portfolio of loans to help customers during this downturn,” she says.
She says applicants must not only build a track record of prudent financial management but also keep debt commitments at a level proportionate to cashflow generative capability.