NEVER ever consider borrowing money from loan sharks, Perak MCA Public Service and Complaints Bureau chief Jimmy Loh said.
Based on his experience in handling these cases, Loh said it was not easy dealing with the illegal moneylenders.
“No matter what the situation, I feel that people should always discuss with their family first.
“They should always be the first option. Family members would listen and also provide consultations,” he told MetroPerak.
“Even if they can’t afford to lend money. I believe they could find other ways to help out,” he said, adding that the average interest rate set by loan sharks was about 30%.
Loh said about 80% of the loan shark cases complaints were related to businesses.
“Some wanted to borrow money to start new businesses and some wanted to expand theirs.
“Most of them can’t get loans from banks,” he said.
Loh also said those borrowing from loan sharks were also getting younger.
“I have cases where people as young as 28 years old are already borrowing from the loan sharks.
“The amount they borrowed were between RM10,000 and RM30,000,” he said.
It was reported recently that a mother of six was said to have been harassed by loan sharks over a debt of about RM25,000.
The woman claimed she was forced to borrow from loan sharks after having her loan applications rejected by banks and loan scheme agencies.
Loh said he understood the difficulties of getting loans from banks, especially if the applicant does not have a stable financial background.
“Banks have stringent policies when it comes to approving personal or business loans.
“I understand that they would check an applicant’s income tax and their loan application to find out whether they can pay back the money,” he said.
A bank officer, Michael Chang, said banks can reject any loan applications that they deemed not eligible.
“There could be several factors to reject an application as there are requirements to be met by the applicants,” he said.
“For instance, if the prerequisite requires documents from Business Registration (SSM) and Income Tax Form B, the bank could consider the loan application.
“If they don’t have both documents, the application will not to be entertained,” he said.
Chang said for small-time traders or hawkers, they need to produce SSM or the Form B.
“Normally, there will be no financial reports available for such businesses,” he said.
“After getting these documents, banks would have a better understanding of the applicant’s financial capacity and repayment capability,’ he added.
Chang said different banks will have their own calculation to evaluate each application and further analysis on the risks involved.
“Banks will also conduct various background checks on the applicant including past and present record of bank borrowing.
“Banks will then use this information and compare with their policy whether it’s workable or not,” he said, adding that applicants who are poor and have no personal collateral to be offered to banks, have an option of seeking micro-financing schemes.
A check at the Tekun Nasional website showed that applicants could get loans of between RM1,000 and RM50,000.
Applicants also do not require a guarantor, with the approval process by its head office to be done within 14 working days.
The fields of business or ventures eligible for the loan included retail and business, services, agriculture, animal husbandry and aquaculture, manufacturing, education, tourism, wholesale and construction.
The basic eligibility conditions include:
- Bumiputra and the Indian Community (Young Indian Entrepreneurs Development Scheme - SPUMI Special Programme).
- Aged between 18 and 65 (Bumiputra) and between 18 and 55 (SPUMI).
- Has been operating a business or has potential and viable business venture plan.
- Possess valid licence/permit/business registration (loans under RM5,000 does not require SSM).
- Has a specific business location or conducts mobile business.
- Involved directly and full-time business (loans up to RM5,000 can be considered for applicants conducting part-time business).
- One loan per household (except separate businesses and has a good repayment record for the household).
- loan repayment of RM20,000 to RM50,000 using post-dated cheque.
- An initial one month repayment amount will be deducted from approved loan.
- Applicants who wish to start a business are required to have own capital of 20% from the loan/business requirement as a commitment to operate the business (except applications by graduates).
- Existing business loan not exceeding RM50,000.
The repayment period for applicants would be from six months up to five years, with a 4% charge per annum applied for all financing.