PETALING JAYA: Bank Negara Malaysia (BNM) is strengthening support for small and medium enterprises (SMEs) through targeted relief, financing guarantees and advisory assistance aimed at easing cash flow and funding constraints.
Its measures include the RM5bil SME Stabilisation Relief Facility and the BNM-CGC Guarantee Scheme, alongside efforts to make SME lending more data-driven and less dependent on collateral.
The broader goal is not merely to help viable businesses weather immediate pressures, but to become more productive, resilient and bankable over the long term.
Read StarBiz’s interview with BNM Assistant Governor Suhaimi Ali on how these initiatives work, who they support and what lies ahead for SME financing.
SMEs continue to raise concerns about margin compression amid rising business costs in Malaysia. How true or serious is this?
We recognise concerns expressed by SMEs on pressures which they face, such as higher input, labour, logistics, and compliance costs. These factors have placed margins under strain, particularly for businesses with limited room to adjust prices. At the same time, the impact is not uniform. It differs across sectors and firms depending on their cost structure, productivity, bargaining position and ability to pass through higher costs while remaining competitive.
The experience of businesses supported under the SME Stabilisation Relief Facility (SME SRF) offers useful insight into the pressures faced by affected SMEs. Many applicants reported rising costs, tighter margins and higher working-capital needs, although the nature of these pressures varies across firms. Manufacturers and construction-related SMEs cited higher material, fuel and logistics costs, while wholesalers and retailers pointed to higher procurement and freight costs, softer demand and weaker orders. Supply-chain delays, additional inventory requirements and slower customer payments have also increased working-capital needs for many businesses.
Nevertheless, it is important to recognise the resilience and adaptability that many SMEs have shown in navigating these challenges. Encouragingly, many businesses are responding proactively by strengthening operational efficiency, investing in digitalisation and automation, upgrading workforce capabilities, and adopting more sustainable business practices.
Looking ahead, continued efforts to strengthen supply chain resilience and explore alternative energy sources will be important in helping businesses better withstand future shocks or disruptions. While margin pressures remain a genuine concern for many SMEs, these strategic investments can help businesses emerge stronger, more productive and better prepared for long-term growth.
While the government has announced some schemes, many SMEs continue to complain about inadequate access to funding. What is your response to this?
Financing remains a critical enabler of SME growth, complementing other key structural drivers such as digitalisation, innovation, and market access. For many SMEs, access to financing goes beyond funding business plans. It provides the confidence and capacity to expand their workforce, pursue new growth opportunities, and navigate periods of uncertainty.
We take these concerns seriously. Access to financing is not experienced in the same way by every SME, and aggregate figures do not always capture the difficulties faced by individual businesses. Some SMEs may face challenges because of limited financial records, short operating histories, insufficient collateral, irregular cash flows or business models that are still unfamiliar to lenders. The policy response therefore has to be practical and targeted by ensuring financing continues to flow at the system level, while improving the channels, risk-sharing arrangements and advisory support for segments that face genuine financing frictions.
It is therefore important to identify and understand where these gaps are to support more effective policymaking.The conversation should move beyond the question of whether financing is available, to whether it is reaching the businesses that need it most, and in a form that suits their circumstances.
System-wide indicators show that SME financing remains broadly supportive. As at end-May 2026, SME financing outstanding grew by 5.3% annually to RM442bil, accounting for about half of total business financing. There were also more than 1.2 million SME financing accounts in the banking system, representing 88% of all business financing accounts. In the first five months of the year, close to four out of every five SME financing applications were approved. These figures are important because they show that financing is still flowing at scale. But they should not be read as dismissing the difficulties faced by individual SMEs.
SMEs differ considerably in their stage of development, financial position, sector, business model and cash-flow profile. Particular segments may therefore continue to face greater financing frictions even where access remains broadly supportive at the system level.
Two segments are more likely to face financing frictions. The first is the thin-file segment, which typically lacks an established business track record, formal financial history or sufficient collateral. This includes microenterprises, start-ups and informal or gig-economy businesses. The second comprises businesses in newer or emerging growth areas, where the business model may be viable but less familiar to lenders. These include asset-light, innovation-driven and technology-intensive firms whose value may sit in capabilities, intellectual property, customer relationships or future cash flows rather than physical assets.
To address these gaps, BNM and the Credit Guarantee Corp Malaysia Bhd (CGC) introduced the BNM-CGC Guarantee Scheme, which supports up to RM10bil in guaranteed financing through participating financial institutions. The scheme is intended to strengthen risk-sharing for viable but underserved SMEs, particularly those that may lack conventional collateral or do not fit traditional financing profiles. It also channels support towards areas aligned with Malaysia’s economic priorities, including innovation, digitalisation and sustainability.
These measures should be seen within the broader SME financing ecosystem. Commercial financing from financial institutions remains the primary source of funding for Malaysian SMEs. BNM’s targeted facilities and guarantee arrangements form only a small part of overall SME financing and are designed to address specific market gaps, not to replace market-based lending. Their role is to support viable businesses where temporary disruptions, information gaps or limited risk-sharing may otherwise constrain access to suitable financing.
Together, these measures are designed to ensure that SMEs receive support not only when they face challenges, but also when they are ready to grow, innovate and seize new opportunities. We want small businesses to have a fair opportunity to access financing, which is important for both business development and the broader economy. These measures support both immediate business needs and longer-term growth.
Can you elaborate on key financial relief measures currently available to SMEs and their impact? Who are the actual beneficiaries, can you please share the data?
BNM's approach is not centred on any single scheme. We recognise that SMEs face different challenges at different stages of their business journey. A business experiencing a temporary cash flow squeeze has very different needs from one looking to expand or recover from financial distress. Accordingly, our support measures are designed to be holistic, helping businesses manage immediate cash flow pressures, restore financial sustainability, improve access to financing, and strengthen long-term resilience.
For SMEs facing temporary cash flow difficulties, BNM introduced the RM5bil SME Stabilisation Relief Facility (SME SRF) in May 2026. The facility provides affordable working capital financing of up to RM750,000 per SME, for a tenure of up to five years, at a maximum financing rate of 3.75% per annum, inclusive of guarantee fees. The objective is to help viable businesses navigate near-term disruptions while continuing their operations and preserving employment. For many SMEs, maintaining access to working capital during a period of uncertainty can make a crucial difference in keeping operations running, meeting payroll obligations and retaining customer relationships.
For businesses experiencing repayment difficulties, financial institutions continue to offer restructuring and rescheduling (R&R) assistance, while Agensi Kaunseling dan Pengurusan Kredit (AKPK) provides dedicated support through programmes such as the Small Debt Resolution Scheme. These measures help viable SMEs regain financial stability and avoid unnecessary business closures during periods of stress. Timely intervention can often give otherwise viable businesses the breathing space they need to recover and move forward with confidence.
Access and support are equally important. SMEs can seek advisory and financing-related assistance through CGC's Customer Service Centre (CSC) and AKPK's SME Helpdesk, while BNMLINK serves as a channel for enquiries and complaints relating to the financial sector. Participating financial institutions have also committed to a quicker approval timeline for SME SRF applications to ensure assistance reaches affected businesses quickly. This reflects a broader recognition that support is most effective when it is not only available, but also accessible and delivered in a timely manner.
Beyond short-term relief, BNM remains focused on strengthening SME resilience and competitiveness. This includes initiatives such as the BNM-CGC Guarantee Scheme, which supports financing for viable but underserved businesses, as well as targeted facilities under the BNM Fund for SMEs that support microenterprises, tourism-related businesses and climate adaptation investments. The broader objective is to enable SMEs to invest in productivity improvements, digitalisation, innovation and sustainability, so that they are better positioned for future growth.
In terms of impact, the SME SRF has approved more than RM1.7bil for 2,789 SMEs as at 10 July 2026. Support has been broad-based, with beneficiaries spanning wholesale and retail trade (25.6%), construction (25.5%), manufacturing (23.1%), and transportation and storage (13.0%). This suggests that the facility is reaching affected SMEs across several key sectors, including businesses involved in domestic supply chains, trade, logistics and everyday economic activity. The focus remains on ensuring that viable SMEs facing temporary pressures can continue operating, preserve jobs and position themselves for recovery.
How does BNM ensure that subsidised funds or guarantee schemes do not simply benefit SMEs that would have qualified for normal bank loans anyway?
Our starting principle is that public support should complement, rather than substitute, commercial financing. Public resources are most effective when they help address genuine financing gaps. As such, subsidised funds and guarantee schemes are designed to bridge market gaps, whether arising from economic disruptions or financing constraints faced by otherwise viable businesses, not to replace financing that would have been readily available on normal commercial terms.
Equally important, public support should not be used to sustain businesses that are no longer economically viable. The objective is to help viable firms overcome temporary challenges or financing frictions, while ensuring that limited public resources are directed towards areas where they can make the greatest difference.
To achieve this, BNM has put in place several safeguards. First, support is targeted at clearly defined segments and circumstances. For example, the SME Stabilisation Relief Facility (SME SRF) is focused on viable SMEs materially affected by trade and supply-chain disruptions arising from the conflict in the Middle East. Participating financial institutions assess whether applicants meet the facility’s eligibility criteria and whether the financing need is linked to the intended purpose. This targeted approach helps ensure assistance reaches businesses facing genuine pressures.
Second, we focus on financing additionality. In simple terms, this means asking whether the intervention is helping SMEs that might otherwise struggle to obtain financing, and whether it is delivering better outcomes than would have occurred without the policy support. The objective is not simply to increase financing volumes, but to ensure that financing reaches the intended underserved segments and supports meaningful business outcomes. In other words, success is measured by whether the financing helps unlock opportunities, preserve viable businesses and support economic activity that might not have taken place otherwise.
Third, programme design is structured to encourage sustainable financing behaviour. The recently introduced BNM-CGC Guarantee Scheme features a range of financing rates that allow wider access, but remain affordable. It also places emphasis on helping SMEs progressively graduate to market-based financing, thereby reducing repeated assistance to the same beneficiaries. The scheme also includes incentive mechanisms to reinforce positive lending behaviours, such as a dynamic guarantee allocation based on banks’ ability to onboard higher-risk segments and first-time borrowers, as well as to price risks appropriately. The longer-term aim is to build financing capability and confidence so that businesses become less reliant on support mechanisms over time and are better positioned to access commercial financing independently.
Finally, BNM continuously monitors the performance and outcomes of its initiatives. This allows us to assess whether support is reaching the intended beneficiaries, identify areas for improvement and refine future policy design based on evidence and experience. This continuous review process is important because SME needs evolve over time. By monitoring outcomes and learning from experience, we can ensure that public support remains relevant, targeted and delivers meaningful impact.
In your opinion, do you think that banks in Malaysia are too stringent in lending, making it difficult for SMEs to secure financing for growth? How is BNM addressing this?
It is important to recognise that we must strike a balance between access and prudence. SMEs need access to financing to grow, innovate and create jobs, but financing decisions must also be grounded in sound risk management. Overly aggressive lending may provide short-term access, but can ultimately create financial vulnerabilities that harm businesses, borrowers and the broader economy.
Responsible lending standards help preserve a resilient banking system that can continue supporting economic activity over the long term. Malaysia’s banking system has remained sound through periods of stress, including the pandemic, and this resilience has helped avoid sharper disruptions to credit flows. The objective is to preserve that strength while ensuring viable SMEs are not unnecessarily constrained by assessment approaches that do not fully capture their business potential.
At the same time, we recognise that segments of SMEs face difficulties accessing bank financing, particularly when their risk profiles do not align with existing banking models. The challenge often arises because their strengths may not be easily captured by conventional credit assessment frameworks. To address specific gaps, BNM has adopted a multi-pronged approach. This includes dedicated financing facilities, efforts to strengthen banks’ credit assessments beyond conventional metrics, and complementary delivery mechanisms that improve SMEs' financing journey. For the latter, we have introduced several initiatives, including the imSME by CGC, a financing referral platform that allows SMEs to apply to multiple financiers, and Khidmat Nasihat Pembiayaan (MyKNP@CGC), which provides advisory support to help SMEs improve their financing readiness or refer SMEs to alternative financing providers.
Through the BNM-CGC Guarantee Scheme, BNM aims to strengthen financing access for underserved SMEs, including those with limited collateral or shorter track records, as well as SMEs in emerging economic activities aligned with national priorities. Over time, the scheme should also support participating financial institutions in strengthening their capabilities to assess SMEs whose creditworthiness may not be fully reflected through conventional underwriting approaches, including through greater use of alternative data, forward-looking assessments and deeper sectoral expertise.
Financial institutions must also continue strengthening their understanding of how different SME sectors operate, including their revenue cycles, supply-chain relationships, working-capital requirements and intangible sources of value. Better sectoral knowledge can support more accurate risk assessment, more appropriate financing amounts and structures, and faster decisions without weakening prudential standards.
Beyond bank financing, the development of alternative financing channels is also important. Capital market solutions, equity crowdfunding, peer-to-peer financing, venture capital, supply-chain financing, trade facilities and other forms of patient or risk-appropriate capital can complement bank lending. This is particularly relevant for innovative start-ups or specialised investments with longer gestation periods or less predictable cash flows. A healthy SME financing ecosystem should offer a continuum of options that matches different business models, stages of growth and funding needs. Not every business need can or should be met through a conventional bank loan.
To sum up, the question is not whether banks should lend more aggressively, but whether viable SMEs can access financing that accurately reflects their business potential and needs. We aim to strike the right balance between preserving prudent lending standards and ensuring that viable SMEs with growth potential have access to the financing they need to expand, innovate and contribute to Malaysia's economic growth.
What are the emerging trends shaping SME financing, and what is BNM’s current focus now in assisting SMEs?
The SME financing landscape is evolving rapidly, driven by changes in technology, business models, customer expectations and the broader economic environment. While helping SMEs navigate immediate challenges remains important, there is also a growing recognition that the conversation needs to move beyond simply increasing access to financing.
Several trends are shaping SME financing, but they point to one broader shift: the ecosystem must move from simply providing more access to providing better and more purposeful access. Targeted relief remains important during periods of uncertainty, especially when SMEs face cost pressures or supply-chain disruptions. But sustainable growth ultimately depends on helping SMEs become more productive, competitive and bankable on their own merits.
A few pre-conditions need to be in place. First, financing must be better directed towards viable SMEs with strong growth potential. This includes underserved but productive segments such as micro and small enterprises, younger firms, women-led businesses, exporters and SMEs in new growth sectors. Many of these businesses have the potential to become the next generation of growth champions, yet they often face greater barriers in accessing financing despite having promising prospects. Ensuring that these segments are not overlooked will be important for both economic inclusion and future growth.
Second, we need to improve how SME credit is assessed. This means reducing excessive reliance on collateral and expanding cash-flow-based and data-driven lending. Better use of transaction, payment, invoicing and supply-chain data can support lending to viable asset-light, service-based, technology-enabled and newer firms, with appropriate safeguards for data quality, privacy and responsible conduct. As business models evolve, financing assessments must evolve as well.
SMEs also need greater awareness of the wider range of financing options available across the ecosystem. Bank financing will remain central, but not every business need is best served by a conventional loan. Depending on the business model and stage of development, suitable options may include trade and supply-chain financing, factoring, leasing, equity crowdfunding, peer-to-peer financing, venture capital and other patient-capital solutions. Advisory and referral mechanisms are therefore important in helping businesses identify the most appropriate source and form of funding.
Third, SME finance must support Malaysia's economic transformation. Financing should go beyond working capital to help SMEs digitalise, improve productivity, upgrade capabilities, participate in higher-value activities, expand exports and transition towards more sustainable business models. The resilience of SMEs is particularly key in navigating today’s challenges of supply-chain disruptions and cost pressures. Deeper sectoral expertise within the financial sector will align financing flows with the needs of high-growth, high-value activities. Financing should not only help businesses survive challenges, but also empower them to innovate, scale up and create higher-value opportunities for their employees and communities.
Fourth, public support must remain targeted and disciplined. Guarantees and targeted facilities should address genuine market gaps and crowd in private financing without weakening market discipline. This requires sound underwriting, appropriate risk-sharing and transparency over public exposures. Public funds are finite and therefore need to be deployed where they can make the greatest impact.
Ultimately, BNM’s objective is an SME financing ecosystem that is inclusive, data-driven, less collateral-dependent and more supportive of business transformation, while maintaining disciplined and sustainable risk-sharing. The goal is not simply more financing, but better financing that helps viable SMEs become more productive, resilient and bankable over time. When SMEs grow on stronger foundations, they create jobs, strengthen supply chains and contribute to a more dynamic Malaysian economy.
