Bank Negara Offers New Financing Facility for SMEs

Last week, Bank Negara Malaysia (BNM) presented two new facilities under BNM's Fund for Small Medium Enterprises (SME) with a facility amount of RM1.0 billion each, they are: 

• The Business Recapitalisation Facility (BRF) and 

• The Low Carbon Transition Facility (LCTF).

The Finance Minister first announced the two facilities during the 2022 Malaysian Budget Speech. The BRF is made available through participating financial institutions (PFIs).

What is BRF?

BRF is a financing facility that aims to support SMEs to recover and grow while handling the level of their indebtedness via innovative financing solutions. Under this facility, SMEs may receive:

• Equity financing via the issuance of preference shares, common shares, or any suitable equity-like instruments; or

• A mix of debt financing from PFIs and equity financing via third party equity financiers (blended finance).

It should be noted that the SME should not use the financing for refinancing of existing credit or financing facilities.

Who can apply for BRF? 

Eligible Malaysian-owned SMEs, including microenterprises from all economic sectors, as well as existing beneficiaries of BNM funds, can apply for the facility.

What projects or activities are qualified for financing under BRF? 

The aim of BRF financing is for: 

• Working capital; and

• Capital expenditure.

What is the maximum financing amount and tenure?

• Eligible SMEs can obtain financing up to RM5 million per SME.

• The maximum financing tenure is ten years. 

What is the financing rate?

• Debt financing: The maximum effective rate is 5.0% annually, including the guarantee fee OR 3.5% annually without the guarantee fee.

• Equity financing: No cap will be imposed on the return for equity investment. 

To learn more, please go to http://bnm.gov.my/brf-lctf or visit http://bnm.gov.my/sme-financing

Which banks provide financing under BRF?

1. Affin Bank Berhad / Affin Islamic Bank Berhad 

2. Alliance Bank Malaysia Berhad / Alliance Islamic Bank Berhad 

3. Al Rajhi Banking & Investment Corporation (Malaysia) Berhad 

4. AmBank (M) Berhad / AmBank Islamic Berhad 

5. Bangkok Bank Berhad 

6. Bank Islam Malaysia Berhad 

7. Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)

8. Bank Muamalat Malaysia Berhad 

9. Bank of China (Malaysia) Berhad 

10. Bank Pembangunan Malaysia Berhad 

11. Bank Pertanian Malaysia Berhad (Agrobank) 

12. Bank Simpanan Nasional 

13. CIMB Bank Berhad / CIMB Islamic Bank Berhad 

14. Export-Import Bank of Malaysia Berhad (EXIM Bank) 

15. HSBC Bank Malaysia Berhad / HSBC Amanah Malaysia Berhad 

16. Hong Leong Bank Berhad / Hong Leong Islamic Bank Berhad

17. Malayan Banking Berhad / Maybank Islamic Berhad 

18. MBSB Bank Berhad 

19. OCBC Bank (Malaysia) Berhad / OCBC Al-Amin Bank Berhad 

20. Public Bank Berhad / Public Islamic Bank Berhad 

21. RHB Bank Berhad / RHB Islamic Bank Berhad 

22. Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank) 

23. Standard Chartered Bank Malaysia Berhad / Standard Chartered Saadiq Berhad 

24. United Overseas Bank (Malaysia) Bhd

How can SMEs know that they are eligible for BRF financing? 

Eligible SMEs should contact the PFIs to verify their eligibility. All applications for financing will be subject to the PFIs' assessments and third party equity financiers.

Is BRF available to existing clients of the PFIs only?

No, BRF is open to new and existing SME customers of the PFIs as long as they are Malaysian SMEs that satisfy the eligibility criteria and pass the credit assessments by the PFIs and third party equity financiers.

Does an SME need to provide collateral to receive financing under the BRF? 

No. Collateral is NOT required under the facility. 

When will the BRF be made available?

The BRF will be available beginning from 3 February 2022 until complete utilisation.

What can an SME do if the PFI rejects its application?

If an application is rejected, the SME is advised to: 

• Receive clarification from the PFI on the reason(s) of rejection; 

• Consider re-apply via the imSME platform (imsme.com.my) if it has not done so earlier.