Shift the Focus: Prioritise Factors within Your Control When Seeking SME Financing
Navigating the world of SME financing can often feel overwhelming, especially in today’s fast-paced business environment. In Malaysia, a recent study revealed that 87% of SMEs encounter difficulties securing financing from traditional banks. Of those, 37% struggle with a complicated application process, and another 36% find interest rates misaligned with their business needs. Micro and small enterprises face particular challenges, with 78.6% of micro enterprises and 63.6% of small enterprises being denied financing.
Figure 1: Top-of-mind challenges faced by SMEs while seeking financing from Banks
For SMEs in Malaysia, accessing the right financial support is crucial, especially considering the high failure rates of SMEs in Malaysia. Nearly 60% of new SMEs do not survive beyond their first five years, and only 40% successfully navigate the hurdles associated with growth. These barriers to growth have been a persistent challenge in the country.
Rather than focusing on external factors—such as complicated loan processes or high interest rates—SMEs should concentrate on what they can control to get SME financing faster. Ensuring strong cash flow, optimising operations, and developing a robust financial strategy can significantly enhance the chances of securing financing. With the right preparation, SMEs position themselves more competitively in the market, increasing their chances of obtaining the SME financing they need to grow. By shifting the focus to manageable factors, SMEs financing in Malaysia can be a pathway towards a stepping stone for success, empowering them to thrive despite external challenges.
Mastering the Money Game: Empowering Your SME Financing Journey
Research shows that when you focus on controllable elements—such as managing cash flow, boosting operational efficiency, and maintaining financial health—you’re better equipped to tackle funding challenges.
Get Your Financial House in Order
Lenders want to know that your business is serious, and nothing says that more clearly than well-organised income statements and expense reports. If you’re carrying high-interest debt, like credit cards, it’s time to get rid of it. After all, paying unnecessary interest and late fees only holds you back.
Another thing to look at is your investment portfolio. When was the last time you reviewed it? If it’s been a while, you might need to rebalance. Keeping your portfolio aligned with your goals and risk tolerance is key to making the most of high-performing sectors. And remember, with 60% of new SMEs in Malaysia failing within five years, keeping your finances in check isn’t just smart—it’s crucial to survival.
Master Your Cash Flow
We all know how frustrating late payments from clients can be, and the cash flow issues that follow are no joke. In fact, nearly half of SMEs in Malaysia(44.8%) face liquidity problems. Regularly tracking your cash flow can help you avoid those issues—and make your business more attractive to lenders.
A handy tool to smooth out cash flow bumps is invoice financing. By unlocking the value of outstanding invoices, you can access quick cash when you need it, helping you stay on top of expenses and keep your business running smoothly.
Explore Alternative Funding Sources
If you’ve been sticking to traditional bank loans, it might be time to explore other options. While 64% of SMEs have raised external financing, many are still leaning heavily on banks, overlooking alternative funding sources. Market-based financing is one of those untapped opportunities. It offers flexibility that could be perfect for your business’s needs. Yet, only 61% of SMEs know about it, leaving 39% in the dark.
Broadening your SME financing options can make all the difference. It’s about finding what works best for your business to ensure stability and growth in an ever-changing market.
Embrace Digital Solutions
If you’re not already using digital tools, now’s the time. Nearly three-quarters of SMEs (73%) have adopted digital solutions, and the benefits are clear—89% of businesses have seen positive results from digitalisation. Plus, 72% of SMEs are using e-commerce platforms to market their products, creating new revenue streams that didn’t exist before.
According to a study (Figure 2), SMEs are eager to use digital platforms for reasons like increased market reach, enhanced customer engagement, improved efficiency, and the ability to gather valuable data. These factors highlight how crucial digital transformation is for sustainable growth and competitiveness. In an increasingly digital world, SMEs that don’t adapt could find themselves struggling to keep up and also struggle more to get business financing in Malaysia from the available SME financing alternatives as well.
Figure 2: SMEs are interested and willing to consider paying for platform-provided solutions
The Bottom Line
As you navigate the evolving landscape of SME financing, remember that success lies in concentrating on what’s within your control—like managing cash flow, diversifying funding sources, and embracing digital innovations. Many SMEs in Malaysia are already leveraging technology to their advantage, and those who hesitate might miss out on crucial opportunities. By proactively exploring a range of SME financing options and staying adaptable, you can effectively address challenges and carve out a path toward sustained growth and success.
If you’re ready to enhance your financing journey, consider partnering with CapBay, where innovative solutions await to help you achieve your ambitions!
Interested to learn more about our SME Financing Options?
*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.
