Top 4 Financing Challenges Faced by SMEs

Top 4 Financing Challenges Faced by SMEs

Having enough cash at hand is critical for the survival of Malaysia’s 262,000 SMEs. Business owners and entrepreneurs turn to various sources to secure the necessary financing for them to take advantage of business opportunities and return to their full economic potential.

#1 Complicated Application Process

The number one challenge for SMEs is the hassle that comes with a complicated application process. Financiers want to manage their risks. Complex, rigid internal procedures are put in place to protect them and their stakeholders. Furthermore, many SMEs are at a disadvantage: their operations all this while may not require having formal accounting or bookkeeping records. Without this documentation, it is tougher for them to obtain financing.

#2 Time-Consuming Disbursement Process

Successful SMEs might be informed of the approval as soon as possible. The next challenge they face, however, is the disbursement period and process. A lengthy financing disbursement process could affect operations – especially when the funding needed is time-sensitive. SMEs would have to forgo opportunities because the approved financing is not disbursed fast enough into the SME’s accounts.

#3 Not Meeting Traditional Financial Institutions’ Requirements

Malaysian SMEs, like everyone else, felt the pinch from the COVID-19 pandemic control measures. They had to make sacrifices. A lot of them had to sell off assets, reduce their stock, or scale down their operations. Those who were retrenched sought ways to make a living. That is why amidst all this, the number of registered SMEs grew by 75,155 in 2021! Some of these businesses may have turned a profit in the last 12 months since starting their business. Yet, cautious traditional lenders may impose strict requirements like a longer operation period, minimum paid-up capital, or complicated documentation keeping their facilities out of these creditworthy SMEs’ reach. 

#4 Extending Credit Impacting Cash Flow

SMEs often feel the pinch when customers and clients utilize their credit facilities. This means that the SMEs would not have enough cash flow to maintain their business operations or replenish their inventory. The effect grows over time. When SMEs cannot meet their demand previously, their customers and clients would bring their business to alternative suppliers. It is a less than ideal situation for everyone.


SMEs are the backbone of Malaysia’s economy; Hence, we at Funding Societies Malaysia introduce our newly enhanced BizFund to help the local SMEs to overcome these challenges. BizFund provides Malaysian SMEs operating for at least 12 months with a minimum of 30% local shareholding with zero-collateral financing up to RM300,000. Successful SMEs will be able to repay the digital financing over a term of up to 18 months. The simple, hassle-free submission is fast and initiated through Funding Societies’ online platform. This facility is ideal for SMEs requiring fast capital disbursement.

Read more about BizFund here to see if it is the digital financing your business needs.