SMEs can now seek financing from MFA

KUALA LUMPUR: Micro, small and medium enterprises (SMEs) facing cash flow problems can seek alternative financing from a RM5bil fund offered by 25 registered financiers under the Malaysian Factors Association (MFA).

The RM5bil factoring allocation, which was announced after MFA’s 37th annual general meeting yesterday, will be offered to qualified companies for the new term from 2023 to 2024.

MFA president Mohamed Fahmi Mohamed Ilyas said the new allocation was an increase from RM3bil in financing that had assisted over 3,500 SMEs as of June.

“Access to financing has become harder as mainstream financial institutions get more stringent while approving loans.

“SMEs, especially, have to show proof of a strong business performance to apply for more funding.

“This is where MFA comes in as a financing alternative for the SMEs, providing them with factoring, invoice purchase or financial counselling when needed.

“Such services will help smoothen SMEs’ cash flow and pump in more capital to fulfil contracts they’ve secured,” he said yesterday.

Founded in 1986, MFA is a non-profit trade association representing Malaysia’s factoring industry with members comprising private factoring firms, licensed money lenders and financial institutions. Factoring is where a factoring company advances cash for a fee to an SME against its receivables finance or unpaid invoices while it awaits payment from the customer.

It is suitable for new start-ups with no track record and credentials to qualify them for the bank facility.