27th October 2025 - 7 min read
You’ve got a business idea. Maybe it’s a weekend photography gig, an online store, or freelance consulting. The equipment and set-up costs RM25,000. Your savings account has RM8,000. A personal loan could bridge that gap in three days.
Should you borrow money to chase a dream business idea that might not work out? Is it worth the risk?
The short answer? Only if your salary can handle the loan payments alone, and you’ve got a clear plan for making money within six months. Most new businesses don’t generate profit in year one. A personal loan doesn’t care about your entrepreneurial journey. It just wants RM700 on the 15th of every month for the next five years.
Your full-time job is what makes servicing a loan possible. Banks will lend to you because you have a stable income. That same income will become your safety net when your side hustle hits slow months. The question isn’t whether banks will give you money. It’s whether you can afford to pay that money back if your business idea flops.
Before you apply for any side-hustle supporting loan, write down three numbers: how much you need, how long that’ll last, and when you’ll make your first sale.
Your runway is how many months you can operate before running out of money. If you borrow RM30,000 and your monthly business costs are RM2,000, you have a 15-month runway. But that only works if you’re not also trying to repay the loan from business income during those months.
Take a real scenario. You’re borrowing RM30,000 at 10% interest for five years to start a photography business. Your monthly loan payment is RM637. Your gear costs RM25,000, and you’re using RM5,000 for initial marketing and permits.
When does the money start coming in? Be specific. “I need four wedding bookings per month at RM500 profit each” is a plan. “I’ll get clients somehow” isn’t.
You don’t need a 40-page business plan or a pitch deck. You need to know what you’re selling, who’s buying it, what it costs you to deliver, and when the first money hits your account. If your plan is “hopefully within six months I’ll get a paying client,” you’re not ready to borrow.
Malaysian banks may give you a personal loan in three working days. An SME loan takes weeks and requires business registration, financial statements, and sometimes collateral.
A personal loan stays yours regardless of what happens with your business. You can shut down your venture tomorrow and just keep paying from your salary. No one can demand early repayment. No one can seize your business assets.
SME loans require SSM registration, business bank accounts, and clear financial projections. If you’re testing an idea part-time, you probably don’t have these yet. Personal loans let you start now rather than spending months on paperwork.
The interest rates aren’t that different either. Personal loans from Maybank, CIMB, and Public Bank range from 6% to 15% for qualified borrowers. SME loans might start around 5%, but they come with stricter terms and potential penalties if your business pivots or closes. Compare rates and terms from multiple banks before you decide.
Your side hustle needs to generate enough profit to cover the loan payment plus at least 30% extra for emergencies and taxes. If your monthly loan payment is RM700, your side business should reliably generate RM1,000 in profit after all expenses.
In our photography business example, you need jobs that generate RM637 in profit monthly just to cover the loan. If you charge RM500 per photoshoot and your costs average RM150 per job, you’re making RM350 profit per shoot. You need two shoots monthly just to break even.
That’s the minimum. A safer target would be four shoots monthly (RM1,400 profit), where RM637 goes to loan repayment, RM400 goes to business savings, and RM363 covers tax and irregular expenses.
If you’re starting an online store selling imported goods and make RM50 profit per sale after all costs, you need 13 sales monthly to cover a RM637 loan payment. Can you realistically get those orders every single month for five years? Work through these numbers honestly, it’s better to adjust your loan amount now than struggle with payments later.
Side hustles rarely generate steady monthly income, so you need a repayment buffer that can handle three to six months of zero business revenue.
Before taking out the loan, save RM2,100 to RM4,200 separately (three to six months of payments). This isn’t your emergency fund or business working capital. This is your loan repayment insurance.
Your photography side hustle might boom during wedding season, but slow dramatically during other months. Your online store might spike during year-end shopping but crawl during Chinese New Year. Your loan payment is due every month, regardless of whether you made RM5,000 or RM0.
If you miss even one payment, banks report it to the Central Credit Reference Information System (CCRIS) maintained by Bank Negara Malaysia. This stays on your credit record for a year and affects your ability to get future loans for homes, cars, or business expansion.
Personal loans used for business don’t create tax deductions, unlike business loans, which allow interest deductions.
According to Lembaga Hasil Dalam Negeri (LHDN), you must register as a business and file taxes once your side hustle generates more than RM50,000 in gross income annually, or RM4,167 monthly, on average. Even if you earn less, you should still declare the income on your personal tax return.
Keep meticulous records of all deductible business expenses like marketing costs, equipment repairs, professional services, and materials. Talk to a tax agent before your first year of side hustle income. Find registered tax agents through the LHDN website or the Malaysian Institute of Accountants directory. They typically charge RM300 to RM800 for basic tax filing services.
Before taking any side hustle loan, write down exactly what you’ll do if the business doesn’t work out.
Can you cover all monthly loan payments from your full-time salary for the next five years if the business generates nothing? If you’re earning RM4,500 monthly and your living expenses are RM3,000, you can realistically handle a RM700 monthly loan payment from your salary alone. That’s uncomfortable but survivable.
Build a three-layer safety net to protect yourself. The first layer is the loan buffer account with three to six months of payments saved. The second layer is your personal emergency fund covering three to six months of total living expenses. The third layer is a specific plan to increase income or reduce expenses if both previous layers fail.
Planning to pivot beats planning to fail. If your photography side hustle isn’t working after six months, could you pivot to product photography for e-commerce sellers? A pivot means changing your target customer or service offering while using the same equipment and skills you’ve already invested in. You’re adapting your business model instead of shutting down completely.
Check your Debt Service Ratio (DSR) to see if you can actually afford the payments. Malaysian banks typically won’t approve loans if your total debt payments exceed 70% of your income. But just because a bank will lend to you doesn’t mean you should borrow. Calculate what feels sustainable for your life, not just what’s technically possible.
Your side hustle should enhance your financial life, not threaten it. It should be fun. The right personal loan at the right time can accelerate a good business idea. The wrong loan or the wrong timing can trap you in debt that outlasts your entrepreneurial enthusiasm. Know the difference before you sign.
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