What is SME financing?
SME financing is any funding provided to small and medium enterprises (SMEs) to run or grow the business. It includes term financing, credit lines, invoice financing and asset-backed financing from banks, development finance institutions and digital platforms. It is also called SME finance, SME funding or small business financing.
SME financing usually means debt financing, which the business repays over time. Equity financing, where investors take a share of the business in exchange for funds, is a separate category.
What Counts as an SME in Malaysia?
SME Corporation Malaysia defines an SME by annual sales or number of full-time employees, whichever the business meets:
|
Size |
Manufacturing |
Services and other sectors |
|---|---|---|
|
Micro |
Sales under RM300,000 or fewer than 5 employees |
Sales under RM300,000 or fewer than 5 employees |
|
Small |
Sales RM300,000 to under RM15 million or 5 to under 75 employees |
Sales RM300,000 to under RM3 million or 5 to under 30 employees |
|
Medium |
Sales RM15 million to RM50 million or 75 to 200 employees |
Sales RM3 million to RM20 million or 30 to 75 employees |
Source: SME Corporation Malaysia, Guideline on SME Definition
Types of SME Financing
- Term financing: a lump sum repaid in fixed instalments.
- Invoice financing: funding against unpaid invoices.
- Micro financing: small amounts for micro businesses.
- Property-backed financing: funding secured against property.
- Dealer financing: funding for vehicle dealers' stock.
- Islamic financing: Shariah-compliant funding.
Learn More
- Financing options at Funding Societies: alternatives to an SME loan
- Blog: Business Loans & SME Financing in Malaysia: The Complete Guide
