LETTER | Recently, my company submitted applications for SME financing under the recently announced Penjana initiative to our banks, which I will refer two as "Bank M" and "Bank R", both major local institutions. To our great disappointment, we learnt that our applications were rejected by both banks.
Our company was incorporated in 2013. We have up-to-date audited accounts. We have paid taxes. Currently, we are struggling, but still paying our employees a full salary despite a drastic drop of income due to Covid-19. This by working very hard to keep our nose above water.
The only borrowing on our company books is a hire purchase loan from "Bank M" of a company car purchased less than a year ago. None of our directors borrowed from the bank so we don’t have a credit history and a rating.
This puts us in a Catch-22 situation meaning that if one never borrowed from a bank, one cannot obtain financing under the Penjana SME scheme from the banks. I find this situation extremely counterintuitive to supposed measures put in place to aid SMEs in these dire times.
Already, SMEs have had to adjust to new working norms, reduction in operational costs, pay cuts or worse, retrenchment. The Penjana initiative provided hope to SMEs like us for a much-needed lifeline in continuing uncertain times.
So, we were very relieved and welcomed the much-needed support and true enough, banks like "Bank M" and "Bank R" pushed out various efforts including 10-minute approvals and online applications instead of their clients having to be physically present.
But the reality is very disappointing.
Despite meeting requirements, I find it utterly unacceptable that our application was still rejected. If this is largely the case with other businesses as well, what is the point of this so called “financial support”? Whom do we turn to when the situation turns south which is beyond our control?
With mounting cases of late, there are understandable fears of another lockdown or partial lockdown which will dampen consumer and business sentiment and might put the final nail in the coffin for struggling SMEs.
SMEs are the backbone of the nation’s economy. We contributed 38.9 percent to the country’s GDP in 2019 and employed 7.3 million people making up 48.4 percent of the national workforce. However, it is incredibly disheartening that the support and aid provided to us is not reflective of our contribution.
I hope that the government especially Laksana and the minister of finance will look into this matter soonest. Call out the banks for not doing their part. Look at their Q1 results – they are all making hefty profits! If SMEs fail to receive much-needed aid, it could lead to many having to cease operations and this will not bode well for our economy in the long-term.
I urge other SMEs to come forth to share their experiences so that we may have a clear understanding of what needs to be done to help the SMEs who are struggling, but still breaking even, to help them survive and get through this period and continue to contribute to the economy.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.