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RM2b financing cover to assist SMEs

[ 02-02-2009 ]

KUALA LUMPUR: Bank Negara Malaysia has announced a RM2 billion SME Assistance Guarantee Scheme (SAGS) to help SMEs finance their operations during the economic slowdown.

With the guarantee cover, SMEs should be able to get better access to financing and at a lower cost, the central bank said in a statement yesterday.

"Financing obtained under this scheme is for new financing only and must be used for business purposes, such as working capital, project financing and capital expenditure," Bank Negara said.

Eligible SMEs can obtain financing of up to RM500,000 per SME under this scheme for tenures of up to five years.

The Credit Guarantee Corporation (CGC) will provide an 80 per cent guarantee cover for financing approved under this scheme. The guarantee cover will be provided free of charge and the cost of the guarantee will be fully borne by Bank Negara.
The scheme can be accessed at any commercial and Islamic bank, SME Bank, Agrobank, Bank Rakyat, EXIM Bank and Bank Simpanan Nasional.

"Participating financial institutions will determine the lending or financing rate to be charged and applications are subject to the normal credit approval process of the participating financial institutions.

"Applications will be open from Feb 3 to Dec 31 2009 or when the financing limit of RM2 billion has been fully utilised," the central bank added.

Source: http://www.nst.com.my/Current_News/NST/Saturday/Frontpage/2462121/Article/index_html

Key Features of the SME Assistance Guarantee Scheme (SAGS)

Key Features of the SME Assistance Guarantee Scheme (SAGS)

Guarantee cover provided by CGC	80% guarantee cover on principal and normal interest. Risk on the remaining 20% will be borne by the participating financial institutions
Guarantee fee	No charges
Interest/financing rate charged	Determined by the participating financial institutions
Source of funds	Participating financial institutions
Purpose of financing	Working capital Project financing Capital expenditure Shall NOT be used to refinance existing credit facilities
Eligibility criteria	SMEs with shareholders funds below RM3 million; and SMEs that are not affiliates and subsidiaries of GLCs and PLCs; and SMEs owned by Malaysians (at least 51% shareholding) residing in Malaysia SMEs adversely impacted by the current economic slowdown.
Maximum financing tenure	5 years.
Maximum financing amount	Aggregate financing of RM500,000 per SME.
Application deadline	Open from 3 rd February till 31 December 2009 or upon approval of financing up to RM2 billion, whichever is earlier. The continuation of the Scheme thereafter will be subject to review.
Participating financial institutions	All commercial banks; All Islamic Banks; Agrobank; Bank Rakyat; SME Bank; EXIM Bank; and Bank Simpanan Nasional.