Alliance Bank Introduces Shariah-Compliant Digital SME Financing Option

Alex Cheong Pui Yin

2nd August 2022 - 2 min read

Alliance Bank has enhanced its Digital SME solution with a new shariah-compliant cash flow financing option, aimed specifically at assisting micro and small businesses (MSMEs) that operate in the halal industry or business people who are more inclined to such fundings.

In a statement, the bank explained that this alternative – known as Digital SME Cash Flow Financing – is based on the Islamic concept of commodity murabahah (tawarruq), and eligible businesses will be able to obtain between RM200,000 to RM500,000 financing via a fully digital channel. To qualify for the financing option, your business must have been in operations for at least three years, with a minimum annual turnover of RM500,000.

Additionally, the Digital SME Cash Flow Financing option offers a tenure of up to seven years, with its variable profit rate starting from as low as base financing rate (BFR) + 3.50% per annum. The BFR is currently set at 5.92% per annum.

Senior vice president and head of Digital SME at Alliance Bank, Kevin Shum said that the Digital SME Cash Flow Financing option is one of the initiatives by the bank as it is gradually expanding to offer fully shariah-compliant products as an additional option for business owners. This is on top of existing conventional Digital SME loans.

“As a bank that has long supported Malaysian businesses, we understand that micro and small businesses, particularly new businesses, may find it challenging to obtain a business line of credit as they may not have established a good credit history. Therefore, we are also offering a micro convenience line to help them meet their short-term cash flow needs, and at the same time, help them build credit history,” Shum further said, adding that Alliance Bank aims to provide RM200 million in digital SME financing via its various Digital SME solutions.

Aside from offering loans through Digital SME, Alliance Bank also features a range of other digital solutions to help business owners manage and grow their businesses more efficiently. These include the BizSmart Solution Portal, which provides a full range of products, services, and online resources to enable them to digitise their businesses sustainably.

Finally, Alliance Bank also noted that it will be launching more new products catering to the needs of business owners in the coming months.

(Sources: Alliance Bank [1, 2])

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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