As announced during Budget 2022, Bank Negara Malaysia will introduce two new facilities under BNM’s Fund for SMEs. The purpose of the fund is to spur the SME’s sector and reenergise growth for the industry.
The RM1 billion Business Recapitalisation Facility (BRF)
This is designed to support SMEs to recover and grow while managing their level of indebtedness through innovative financing solutions. Under BRF, SMEs may obtain:
a) Equity financing through the issuance of preference shares, common shares, or any suitable equity-like instruments; or
b) A mix of debt financing from participating financial institutions (PFIs) and equity financing through third-party equity financiers (blended finance).
BRF is available for SMEs of all economic sectors, up to a maximum of RM5 million, for financing working capital and/or capital expenditure. The tenure of financing is up to 10 years.
For b), the effective rate for debt financing under BRF is up to 3.5% per annum for financing without guarantee or up to 5.0% per annum inclusive of any guarantee fee.
BNM has asked interested SMEs to apply directly from participating commercial banks, Islamic banks, and development financial institutions.
According to Bank Negara Malaysia Governor, Tan Sri Nor Shamsiah Mohd Yunus, “More innovative financing solutions, such as blended finance and equity financing, pool together resources, capacity and knowledge across the public and private sectors comprising banks, development financial institutions, and equity investors. This enables businesses to build back better in the post-pandemic landscape.”
The RM1 billion Low Carbon Transition Facility (LCTF)
The RM1 billion LCTF supports and encourages SMEs to adopt sustainable practices for business resilience. Under the design of the Facility, financial institutions will match the LCTF with RM1 billion of their own funds. This Facility is in line with the Government’s target for Malaysia to be a net-zero emission economy by 2050.
These sustainable practices include, but are not limited to:
- Obtaining sustainability certification;
- Increasing use of sustainable materials for production;
- Improving energy efficiency of building and appliances; and
- Installing on-site renewable energy generation equipment.
The LCTF is available for SMEs of all economic sectors, up to a maximum of RM10 million, for financing working capital and/or capital expenditure. The tenure of financing is up to 10 years. The financing rate is up to 5.0% per annum, inclusive of any guarantee fee.
“There is an urgent need for SMEs to adopt sustainable practices in their business operations moving forward. The LCTF encourages this and supports the financial industry to innovate their product offerings to facilitate businesses embed sustainability and recalibrate their business operations and processes,” said Governor Nor Shamsiah.
Enhanced Features of the Disaster Relief Facility 2022 (DRF 2022)
BNM has recently increased the allocation for DRF 2022 by RM300 million, bringing the total allocation to RM500 million. Eligible SMEs and micro-enterprises will now be able to obtain financing up to RM700,000 per SME and up to RM150,000 for micro-enterprises. The financing tenure has been extended up to 7 years.
SME’s are encouraged to apply for the available funds, application will open from 3 February until funds are fully utilised.
