BUTTERWORTH, Sept 29 (Bernama) -- Local banks are expected to approve at least RM1 billion in loans under the micro finance scheme to small and medium businesses next year, Second Finance Minister Tan Sri Nor Mohamed Yakcop said.
The scheme will be funded by the banks themselves - Bank Simpanan Nasional (BSN), Bank Kerjasama Rakyat, Bank Pertanian, Alliance Bank, CIMB Bank and AMBank - he told reporters after launching the new logo for BSN's model branch and the bank's northern zone micro finance centre here.
Nor Mohamed urged the banks involved to make the loan process easier as it benefits small business start-ups and expansion of small businesses.
He pointed out that since the micro finance scheme is not asset-based, applicants with good cash flow ought to be provided with the loans.
"People who want such loans should not be worried (because no collateral is involved). If an applicant can show good cash flow and that the business is competitive and can grow, the loan processing shouldn't be a problem."
According to him, small and medium businesses can get loans of up to RM50,000 each under the scheme. "The interest rate may be a bit higher but if the borrower adheres to the repayment schedule, I'm sure a rebate will be given," he added.
In his speech earlier, Nor Mohamed reiterated the government's commitment towards the growth of small and medium entrepreneurs as this will not only increase their income but also contribute towards the nation's economic growth.
He said the government is aware that many of these entrepreneurs face difficulties, especially in terms of funding, technical expertise and business networking. To ensure that they have access to business financing, the government, he said, has introduced several funding schemes in the form of soft loans, grants and credit guarantees.