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Crewstone International

Financing SMEs – Growing Small Businesses

One of the biggest challenges for local SMEs is funding. Initially, business owners use their own – often limited – savings, or that loaned from family and friends. Some entrepreneurs and business owners also approach Angel Investors or Venture Capitalists to gain access to a larger sum of capital once they have set their business plan or idea in motion.

Once the business starts to expand, entrepreneurs may need to source for additional financing, most probably from the various government agencies and authorities. But with so many available financing channels, it is the ability to differentiate between them and identify the most suitable financing option that determines the continued growth and future of the SME.

Common Misconceptions

A majority of investors have misconceptions about the type of funding available and the processes involved in acquiring funding. Here we dispel some of the most common ones:

1) Not Every Company/Project Qualifies for Funding
There are some key qualifying criteria that potential investors must fulfil in order for their company or project to be given due consideration by the relevant authorities:

Failure to Launch – Why Some Investors Don’t Succeed

Most of the time, potential investors are unable to secure the amount of funding that they require, due to improper documentation or lack of awareness on what is required by the authorities.

It is in the presentation of the right information that potential investors often falter. The project proposal must be comprehensive and realistic, reflecting the exact nature of project or business that will be implemented. Most importantly, they must be able to demonstrate how they can tangibly contribute to the country’s economic development and growth.

Obtaining Funding for Your Business

A major challenge that potential investors face in Malaysia is that there is no single authority that is responsible for the approval of funds, grants and incentives. Therefore, it can be very tedious to obtain the relevant information from the different organisations, and then to try and understand their respective terms and conditions.

Adding to the complexity of this process is the fact that many of these grants seem to be overlapping with each other on the types of businesses that they cater to. For example, SMEs can apply for assistance from both SME Corporation and MIDA. However, what most investors may not know, is that the exact nature of the assistance differs, which is why it’s crucial to understand the fine print.

Engaging a Business Consultant

There are some considerations that foreign companies should look into when engaging a local consultant, in order to reap the maximum benefits of their partnership:

1. Cost
It is important to look for a consultant who is outcome-focussed as opposed to one that charges a lump sum as their consultation fee, to ensure that clients pay only for a successful or desired outcome, especially when it comes to a specific objective like applying for a grant.

Easing the Way for Foreign Investors

Having had first-hand experience in assisting MNCs and foreign companies to expand their footprint into Asia and specifically Malaysia, we are only too aware of the many challenges and roadblocks that they could face even before they set up their operations here.

There are many unwritten rules and practices that foreigners in Malaysia may not be familiar with, and unfortunately not everything is available in black and white. The process, if done from scratch, can consume countless man hours and a significant amount of cost for the company. Very often, foreign investors find themselves being given the ‘run around’ by some authorities, resulting in more time, money, and frustration in the long run.
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