PETALING JAYA: Close to four out of every five financing applications by small and medium enterprises (SMEs) were approved between January and May 2026, according to Bank Negara Malaysia (BNM).
In an interview with StarBiz, the central bank’s assistant governor Suhaimi Ali pointed out that system-wide indicators show that SME financing remains broadly supportive.
As at end-May 2026, outstanding SME financing grew 5.3% year-on-year 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.
“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,” Suhaimi said.
Asked about SMEs’ complaints of inadequate access to funding despite the government’s rollout of various funding schemes, Suhaimi said the central bank takes the concerns “seriously”.
However, he said access to financing is not the same for 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.”
Suhaimi said two SME 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 micro enterprises, startups 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 Credit Guarantee Corp Malaysia (CGC) introduced the BNM-CGC Guarantee Scheme, which supports up to RM10bil in guaranteed financing through participating financial institutions.
“We want small businesses to have a fair opportunity to access financing, which is important for both business development and the broader economy,” Suhaimi said.
Looking ahead, the assistant governor said 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 policy-making.
“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.”
A business qualifies as an SME if it meets either the sales turnover or full-time employee threshold, whichever is lower.
For the manufacturing sector, this means recording annual sales turnover of not more than RM50mil or employing not more than 200 full-time workers. For services and other sectors, annual sales turnover must not exceed RM20mil or the number of full-time employees must not exceed 75.
SMEs in Malaysia have continued to complain about margin compressions amid rising business costs. The businesses had to either absorb additional costs or pass through to consumers, resulting in higher prices.
BNM recognises the concerns expressed by SMEs on pressures 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.
However, the central bank noted that the impact 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,” said Suhaimi.
The RM5bil SME SRF was introduced by BNM earlier this year to assist SMEs, including micro enterprises, affected by the ongoing West Asia conflict.
Eligible SMEs may obtain financing of up to RM750,000 for a tenure of up to five years, at a maximum financing rate of 3.75% per annum (inclusive of guarantee fee). The financing will be supported by guarantees of up to 80% from CGC or Syarikat Jaminan Pembiayaan Perniagaan or SJPP, particularly for SMEs without sufficient collateral.
Suhaimi said 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,” he said.
“Supply-chain delays, additional inventory requirements and slower customer payments have also increased working-capital needs for many businesses,” he explained.
Nevertheless, Suhaimi said 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.”
Via the SME SRF, more than RM1.7bil in financing have been approved for 2,789 SMEs as at July 10, 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%).
“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,” he added, saying that public support should not be used to sustain businesses that are no longer economically viable.
The central bank has put in place several safeguards.
First, support is targeted at clearly defined segments and circumstances.
For example, the 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, Suhaimi said programme design is structured to encourage sustainable financing behaviour.
The 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.
“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 SMEs need to evolve over time.
“By monitoring outcomes and learning from experience, we can ensure that public support remains relevant, targeted and delivers meaningful impact,” Suhaimi added.
