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SME financing guide: every option, with pros and cons

Malaysian SMEs can raise money in more than a dozen ways. Which one fits depends on your stage, cash flow, assets and how much ownership you are willing to share. Start at the bottom of the ladder and move up as you grow.

1 Self & circle

Savings & bootstrappingFunding the business from your own savings and early sales keeps full ownership and control, but growth is…Family & friends (the “FaMa bank”)Money from parents, relatives and friends is often the first outside capital, and it is fast and flexible,…

2 Non-dilutive support

Grants & matching grantsGrants from agencies such as Cradle, MDEC, MATRADE, SME Corp, MIDA and MTDC do not have to be repaid, but…Government-backed loans & guaranteesDevelopment financial institutions and guarantee bodies such as SME Bank, TEKUN, BSN, Agrobank, CGC and SJPP…

3 Working capital & debt

Bank term loans & credit linesBanks, including Islamic banks, lend against your track record, cash flow and collateral, and they are…Peer-to-peer (P2P) financingP2P platforms registered with the SC match businesses that need debt financing with many investors, and…Invoice financing & factoringInvoice financing advances you cash against invoices your customers have yet to pay, so it suits B2B…Revenue & cash-flow financingRevenue-based financing is repaid as a share of your sales, so payments rise and fall with your income; it…Leasing & asset financingLeasing and hire purchase let you use machinery, vehicles or equipment while paying over time, with the…Licensed moneylendersMoneylenders licensed by KPKT under the Moneylenders Act 1951 can be a faster, last-resort option for…

4 Early equity

Equity crowdfunding (ECF)ECF lets many investors buy small shares in your company through an SC-registered platform; the government…Angel investorsAngel investors are wealthy individuals who invest their own money in early-stage companies, often adding…

5 Growth equity

Venture capital (VC)Venture capital funds invest larger amounts in high-growth companies in exchange for meaningful equity,…

6 Late stage & exit

Private equity (PE)Private equity firms buy significant stakes in established, profitable companies to help them grow or…Listing on Bursa (ACE & LEAP markets)Listing on Bursa Malaysia, including the ACE and LEAP markets, opens access to public capital and gives…

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