Small and Medium-sized Enterprises (SMEs) throughout ASEAN still have the same problem: limited financing access. This classic issue also haunts Malaysian SMEs. Although SMEs greatly impact national economic development, many financial institutions still find it risky to facilitate loans for potential SMEs. The situation causes SME development to stunt. How can SMEs deal with this problem?
SMEs’ Financing Gap in Malaysia
According to a study conducted by Deloitte and Visa, since 2013 Malaysian SMEs have contributed 33% of the country’s gross domestic product (GDP). Malaysian SMEs also contributed to more than half (58%) of national employment. This shows that SMEs are one of the greatest factors that affect economic development. Developing local SMEs should be supported to bring the national economy to greater prosperity.
However, it is not easy to grow SMEs. Local SMEs have limited access to funding. According to the same Deloitte report, 38% of all SMEs in Malaysia remain unserved and another 10% remain undeserved by financial institutions. In fact, 55% of Malaysian SMEs require more funds for business operations.
Of all the investment on Malaysian SMEs, only 52% are financed by bank funds. Clearly, despite being underserved, many local SMEs still rely on banks.
More Financing Sources are Needed
Imagine if the SME funding problem remains unresolved. It will worsen economic development in Malaysia, as SMEs play a pivotal role in strengthening the national economy.
An alternative financing solution to substitute bank funds should be considered. There is a demand for a financing product that is simple and quick to facilitate SME needs and growth.
FinTech can answer this financing problem. With FinTech’s online platforms, SMEs can gain online funds faster. Plus, FinTechs offer an easy online-based application process. These days, fast loans are more accessible – you can gain capital for your business more easily.
Always be aware of alternative financing options. More and more financial innovations are entering the market. These days, you can find different options and pick the best choice to grow your SME. Good luck!