Accelerate your business’s growth with MSME loan

Md. Meher Ullah • October 18, 2022 • 9 mins read

Even though the vast majority of these firms are found in the unorganized sector of the economy, micro, small, and micro-sized enterprises (MSMEs) make a considerable contribution to Malaysia’s gross domestic product.

In the recent few decades, this industry has experienced rapid growth. Nevertheless, there are other elements that can support MSMEs in reaching their full potential.

In Malaysia, MSMEs are mainly unorganized. Many business owners have a tendency to spend their savings to launch operations, but they must reinvest in order to expand. This can be accomplished by contributing more personal or family savings, cash flow, or MSME loans.

  1. What is an MSME loan?
  2. How MSME loans assists business growth
  3. Credit Score
  4. Statutory Registrations (GST)
  5. Bank Statements and Financial Statements
  6. Conclusion

What is an MSME loan?

Any loan or credit facility offered by banks or non-banking financing organizations to micro, small, and micro-sized businesses to meet their financial needs is referred to as an MSME loan.

Small-ticket MSME loans are frequently provided by many lenders without any type of security, but larger loans are typically subject to collateral requirements. A plot of land, a house, or a piece of business property might serve as the collateral.

Small and micro-sized enterprises and startups typically lack the assets or property needed to satisfy the collateral requirements of many lending institutions. As a result, a sizable portion of MSME business loans are secured.

How MSME loans assists business growth

Since it takes time for a business to earn enough excess to be reinvested in the company, financing expansion through cash flows has a tendency to delay expansion. Additionally, the majority of MSME business owners lack the ability to continue investing their savings in their companies. Therefore, the best method to go huge is to get an MSME loan to expand.

MSME loans are a great way for borrowers to get the money they need for business expansion. These loans can be used for a variety of purposes, including business expansion. These loans can be used by MSMEs to finance working capital requirements, purchase raw materials or inventories, buy fixed assets and equipment, improve infrastructure and technology, and for marketing.

However, there are a few significant requirements before a company organization can apply for an MSME loan. Let’s take a look at some of the most common requirements.

Credit Score

A default on a loan puts the lender at danger of losing money. Lenders analyze a borrower's ability to repay loans on time by looking at their credit history and credit score.

A borrower's creditworthiness is revealed by their credit score. This is based on a person's credit history, which takes into account things like timely repayments, how frequently one has borrowed money, how much, what kind of loans, etc.

An excellent credit score of 800 or higher not only makes it easier to establish a credit line, but it also makes it easier to negotiate a better interest rate and other terms.

Statutory Registrations (GST)

It is crucial to register a firm with the Goods and Service Tax (GST) administration. A corporate entity is given a special number by tax authorities under the GST law, which enables them to collect tax on behalf of the government.
Lenders prefer to grant MSME business loans to companies with the necessary legal registration.

Bank Statements and Financial Statements

Accounts make it easier to comprehend what is going on in a firm. An audited financial statement from a potential borrower is frequently requested by MSME loan providers as confirmation of an accurate business record.

These documents aid lenders in determining how effectively the company has managed its finances. Lenders are impressed by a financial statement that shows strong profitability and a steady cash flow.

Bank statements provide lenders a good sense of a company's actual cash flow and financial stability. Bank statements assist lenders in determining the main inflows and outflows into the business that are used to determine loan eligibility.


The majority of small business entrepreneurs often lack the capital necessary to launch and expand their operations. Additionally, many startups lack consistent financial flows and profits that they can use to expand their operations. Where MSME loans can be useful is in this situation.

MSME loans are available from all banks and non-banking financial institutions like IIFL Finance for a range of uses. Reputable lenders like IIFL Finance are aware of the financial requirements of any MSME.

Young business owners who lack assets or property can still obtain a line of credit from iLending without putting up any security. Many MSMEs use iLending because of the minimal paperwork requirements, competitive lending rates, and rapid loan disbursal.
re used to determine loan eligibility.