How SJPP makes business bank loans accessible to M’sian SMEs

[This is a sponsored article with Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP).]

As an entrepreneur or startup in Malaysia, you’ve probably hit the frustrating wall of getting a bank loan at some point. Not because your idea lacks merit, but it’s usually due to factors like insufficient collateral and cash flow limitations.

Sadly, this isn’t an isolated occurrence.

While SMEs are a critical component of the local economy and contribute more than a third of Malaysia’s GDP, access to financing remains a persistent roadblock.

This is where government guarantee schemes come in. Nations across the globe offer such schemes to businesses as an alternative to traditional collateral, giving SMEs a fairer shot at securing financing.

Think of them as a safety net that gives banks the needed confidence to approve a bank loan, even when young businesses lack the assets to back it up. In Malaysia, the company that provides this assistance is Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP).

How does a government guarantee scheme actually work?

A wholly-owned company of the Ministry of Finance, SJPP was established back in 2009 to manage government guarantee schemes. As the name suggests, the company steps in and acts as a guarantor when SMEs don’t have enough collateral to get financing from banks.

But don’t mistake SJPP as a financial institution that businesses borrow money from (i.e., the “lender”) because it’s not.

For context, collateral refers to assets with a specific value that a borrower pledges as security for a loan. It ensures the lender can recover their money if the borrower is unable to repay and also reduces the risk of lending to the borrower.

How government guarantee schemes, and in this case SJPP, work is by taking on most of the credit risk. In fact, SJPP provides government guarantee coverage of up to 90% of the total loan amount.

Banks risk is minimised, thereby encouraging banks to extend loans that support business growth. 

As a result, banks are more willing to provide financing more readily, and in some cases, on more favourable terms.

Here’s an overview of the steps for easier digestion:

1. Businesses submit their loan application to a participating financial institution.
2. The financial institution evaluates the application to check if the loan requirements are met, and if it aligns with SJPP’s criteria and eligibility.
3. If it does align with SJPP’s criteria, SJPP provides the guarantee coverage and the business secures the loan.

Currently, SJPP partners with various financial institutions, such as Maybank, RHB Bank, CIMB Bank, Alliance Bank Malaysia, UOB Bank, Hong Leong Bank, and Bank Islam to name a few.

Boosting up the Malaysian economy, one loan at a time

These efforts go beyond helping just SMEs. Serving as guarantor for high-risk, high-reward sectors like technology and green economy ensures that Malaysia isn’t left behind in key nation-building industries. 

Without guarantees in place, many of these businesses would not get the needed financing to scale up. 

There is also the matter of inclusion. The reality is that SMEs in rural areas and women-led companies often struggle more when it comes to meeting bank requirements. Hence, SJPP’s role is made even more crucial in bridging the financial gap.

When you add all these factors up, it’s clear that SJPP doesn’t just address loan rejections caused by insufficient or lack of collateral. Rather, it’s quietly moving Malaysia up the value chain and closer to its ambition of becoming a high-income nation.

To date, this government guarantee scheme has provided over RM90 billion in credit financing and supported more than 100,000 SMEs.

By helping these businesses get financing, they’re able to expand further and serve more people. Take Berkat OSH Services Sdn Bhd as an example. An occupational healthcare provider, Berkat OSH Services initially faced challenges in securing a business loan. 

With the support of SJPP’s government guarantee scheme, the company was able to expand by opening more clinics, recruiting additional staff, and acquiring vital assets such as ambulances to better serve the local community.

More than assistance, it’s a nation-building strategy

For Budget 2025, the government had allocated RM20 billion to SJPP with the goal of fostering the growth of around 80% of local businesses.

So if you’re running an SME or have a business ready for expansion, don’t let collateral requirements hold you back. Ask your preferred bank about SJPP-backed financing, or learn more at its website.

• Learn more about Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) here.
• Read stories we’re written about Malaysian startups here.

Featured Image Credit: Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP)