All The Ways to Raise Money for Business in Malaysia, Compiled

So you have an awesome business idea. And you want to pursue it, hoping that it will generate you a nice bit of income. It could be for a full-blown business, or a flexible side income after work/school hours. But you quickly hit a problem: you need money. You came to the right place – Here are all the ways to raise money for business in Malaysia.

Note: If anything is wrong or missing, please let me know by commenting. Also, this article applies to us common folks, not to people who are born into money. Not all options might apply to everyone.

First up: do you even need money to fund your business?

Well yes you certainly need some money, but some people get really caught up with their business plan and start listing 1001 things they  think they absolutely need to buy and get before they even start. I know I did, with my own writing business. I even thought I needed to rent an office (legit thought it was a requirement) (actually no need, I just didn’t know what I didn’t know).

There are businesses you can start with no or little up-front costs. First, check if what you want to do is listed in this 101 businesses you can start with just $100 article. If it is, good, you really don’t need that much money then. See ‘Ways to raise money for business in Malaysia under RM10,000’ in the next section.

For the rest of you requiring more money than that, see ‘Ways to raise money for business in Malaysia over RM10,000’ further down this article.

Ways to raise money for business in Malaysia under RM10,000

In the bigger scheme of things, RM10,000 really isn’t that much. With personal discipline and some side hustling you can probably save up that amount in less than a year. Here’s how to fund your business if you only need up to RM10,000.

Own savings

Have to put this out there even though it’s obvious.

After you saved up your emergency funds (3-6 months’ worth of living expenses), consider using this money to fund your business. Other options can work, but you’ll immediately save on the respective loans’ interest rates and/or time to apply for those financing.

I intentionally omitted ‘family and friends’ here as a funding source. Dunno lah, I think it’s not nice to ask people you know to fund you unless it’s a) freely offered or b) you’re willing to jeopardise your relationships with them.

Advance cash option from banks

Personally, I’ve applied for Maybank’s EzyCash option a couple of times, and thought the 3.88% fee is reasonable (well, effectively 7.76% per annum). It was crazy easy, too – applied via Maybank2u and the money appeared in my bank account straightaway – I just have to pay it back within 6 months. I’d consider credit cards and personal loans as advance cash options too. 

Have not tried with other banks, so I don’t know their rates, but go ahead and check. 

Whichever you choose, just make sure you’ll be able to make the repayments. The consequences for missing payments are HUGE. It’ll affect your credit score and ability to buy a car/house. Mentally, you’ll get stressed and depressed. You may have to spend years to pay back the loan, and be forced to take any job that come your way, even the ones you hate.

Ways to raise money for business in Malaysia over RM10,000

Ah, now it gets trickier. Requirements that you should have to get this amount of money and more:

• A business that you want to grow, rather than start. That means you need a company already.
• Or if you have not started the business yet, then you need a proper business plan + pitch deck + whatever that will convince the other party to give that money to you. There are very limited options for businesses in this stage, also called the Ideation stage. Investors like to see at least an MVP (Minimum Viable Product) aka what is it you’re actually offering.
• Helps that you are a tech startup or rural business, a lot of funding is prioritised there nowadays

MaGIC Central’s Resource page

If you click this page, you’ll find a listing of funding available specifically for aspiring entrepreneurs. Select preferred funding options too if you want: they listed Angel Fund, Crowd Funding, Loan, Grant, Venture Capital & Equity and Guarantee Service options. 

I thought that this resource page is only for tech startups, but that’s not the case. For example, I found:

• Creative Industry loan (2-4% interest rate)  – covering everything from fashion to performing arts ventures
• Science Fund grants for research and development-related projects (EDIT: broken link)
• And of course a fair few tech-focused funds, including Cradle Fund’s CIP Catalyst which gives pre-seed funding (like, idea-in-your-head stage)

Last I checked, there were 73 options.

SME Bank

Having browsed through their website, I can see that there are really a lot of good financing programmes being implemented, with very reasonable loan rates. See picture below for the programmes as of time of writing (July 2017). There are specific funds for:

• young people (Young Entrepreneur Fund),
• women (Financing Program for Women Entrepreneur),
• online business (Online Business Financing Program),
• racial groups (My Seed SME Scheme – Indian; for Malays/Bumiputera check yourself below)
• and more. Check out the full website here.

SME Corp-listed SME Financing

These come with specific terms and conditions that you need to fulfill in order to qualify. Available under various ministries, agencies and private entities, there are four types of help available:

• Loan schemes
• Grant schemes
• Venture Capital
• Guarantee schemes

Last I checked, there were 148 entries covering a wide variety of sectors and stages of business. Go ahead to the website and browse for yourself.

Small business loans from banks

Quite straightforward, most of us know this option is available. Last time you had to ask each bank individually for their rates, but now it’s easier – iMoney has a comparison tool which lists banks and their interest rates. Click here.

P2P (peer-to-peer) lending platforms

A relatively new offering, P2P lending platforms connect businesses to individuals who are willing to lend their money, in return for an agreed interest rate. Here are all the available P2P lending platforms in Malaysia now:

• B2B FinPal
• Ethis Kapital / Kapital Boost – the only one focusing on Syariah-compliance
• FundedByMe Malaysia – good if your business wants to attract international investors, not just Malaysians
• ManagePay Services – no website yet as far as I know
• Modalku Ventures / Funding Societies
• Peoplender / Fundaztic

I think that P2P platforms is an attractive option for the lenders because it gives quite high rates (over 8% is common). Some time ago I actually deposited money in one of the platforms above, but promptly took it out because there was nothing available for me to invest in. Don’t know if the situation improved.

For the business side, even though rates are higher I think it’s worth considering P2P lending platforms for the added marketing/advertising element, especially if you don’t want to let go of any equity in your business.

Equity crowdfunding (ECF) platforms

Also a fairly new offering, equity crowdfunding platforms allows individual investors to hold some ownership in your startup/business in exchange for funding. Here are all the available equity crowdfunding platforms available in Malaysia now:

• PitchIN – focuses on tech startups, links with incubator WatchTower & Friends. Open for startups in ideation stage
• FundedByMe Malaysia – good if your business wants to attract international investors, not just Malaysians
• Ata Plus – Blockchain-enhanced ECF platform
• Eureeca – good if your business wants to attract international investors, not just Malaysians
• CrowdPlus.Asia – Accepts established businesses across different sectors looking for growth
• Crowdo – Says that it connects Asia’s startups to global market

ECF platforms are also great for the added marketing/advertising benefit, as well as the business mentorship.

Angel investors

Did you know we have our very own Malaysian Business Angel Network (MBAN)?  They are comprised of High Net Worth Individuals (over RM3m) or High Income Earners (RM180k per annum, or RM250k with spouse) who can enjoy tax benefits up to RM500k under the Tax Angel Incentive Programme if they invest in your business.

To be eligible, your company must be:

• Minimum 51% Malaysian-owned
• Core business must be tech-related
• Cumulative revenue less than RM5m
• Been operating for 3 years or less
• And registered as a Registered Investee Company (apply here)

Even though I don’t personally know any angel investors, I do know that this way of getting financing relies a lot on networking and your personal ability to convince individuals (all of whom are businesspeople, mind you) into believing into your business idea. They have to love it enough to fund it.

VC firms (venture capital firms)

Nexea Angels has a very good list of available venture capital firms providing financing to Very Early Stage (RM>2m) and Later Stage (RM>2m) startups. Find it here.

Honestly, I don’t really know how VC firms work. I know that they look for high-potential startups to invest in, and that many of them reduce risk by investing in more mature businesses with already-established userbase/clients with projected profit revenue and whatnot. If you have insight into the world of VC funding, can you share in the comments section, please?

Conclusion

The above are all the ways I know to raise money for your business in Malaysia. Many of them come with added benefits like mentorship and advertising. Try as much as possible to avoid getting funding from credit cards, personal bank loans and loan sharks – I think the risks to your personal finance are too big in case the business fails (and statistically, 9 out of 10 businesses close shop within 5 years, so).

You’re not limited to one funding option; you can choose a few depending on what you want at different stages of your business.

This article is not as complete as I’d like. Aside from own savings and cash advance method, I’ve not personally tried the rest. My own business is quite small, and I’m in the process of brainstorming ways to grow it. When I’m ready to scale it and exploring funding options, I’ll update this article with more information.

If you’ve personally tried any of the funding methods above – successfully or otherwise – can you share your experience in the comments for the rest of us to learn? Thanks! 🙂

Related: Side Income Malaysia: 15 Business & Part-Time Ideas to Try Now