April 03, 2015 | Sharon Cheong
You may have a great concept for a lucrative small business in Malaysia. Entrepreneurs come up with amazing ideas each year, but they just don't have the working capital to get started. Funding for a small business in Malaysia normally requires assets or collateral that can be leveraged in order to obtain a loan. The Malaysian government also offers numerous programs designed to assist investors and entrepreneurs.
Loans for asset acquisition are available and this can be a strategic way to expand your business. Traditional lenders also offer term loans and these types of loans usually work pretty much the same. You will need a solid credit rating, a strong business plan, and assets such as buildings, land or vehicles. The terms and conditions as well as the amount you can borrow depend on many variables.
Short term financing may also be available for items like machinery purchases and working capital. Usually a short-term loan is easier to acquire, but must be repaid more quickly with higher fees and interest rates. Revolving credit (line of credit or LOC) can be a valuable commodity to have. You can use this for your company's day-to-day operations and you only access the money as you need it. This means you aren't paying interest on money until you actually use it.
This type of financing is a major aspect of the global economy and the World Trade Organization estimates that up to 90% of global trade relies on this method. This category includes all types of lending, bills of exchange purchased (BEP), factoring, trust receipts, issuing letters of credit, export credit and insurance. It is often used by importers and exporters, service providers, banks and financiers.
Many business owners use factoring to borrow. This is where you sell your accounts receivables (invoices) to obtain fast cash for urgent needs. This should be a last resort, since you, in essence, use assets you don't really have yet to get the loan. It's like mortgaging your business future.
Though there are numerous obstacles to overcome, it's possible to start a small business in Malaysia and grow that into a very profitable venture within just a few years. It does take hard work, a real vision, creativity, and the ability to learn from mistakes. Many prosperous entrepreneurs have amazing success stories of starting small and growing into an international company. Malaysia has everything you need to do this.
The government of Malaysia has set in place many initiatives and incentives to help investors succeed. Whether you have a great idea for some type of new technology or service, you'll find lucrative opportunities for local and international commerce. Remember to have all your necessary paperwork in order before approaching a lender so that you're fully prepared for whatever questions may come up.
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