Best Micro Enterprise Business Loans in Malaysia 2023

Grow your startup funding with a micro business loan to help your working capital and credit score. Compare sustainable microfinance loans from partner banks with Bank Negara Malaysia and get lower loan rates from the micro enterprise fund.

Micro SME in Malaysia

What is Micro SME?

Micro SMEs or enterprises are a vibrant and profitable constituent of Malaysia’s growing economy. As more members of the workforce become self-employed, the growth of micro SMEs in Malaysia has increased significantly throughout the years.

Generally, micro SMEs are companies with annual sales turnover and assets valued at less than RM300,000 and with fewer than 5 employees, including the business owner. 

Regarded as a subcategory of small SMEs, micro SMEs can develop in a variety of industries typically manufacturing, services such as restaurants or hotels, and others which include primary agriculture, construction, mining and quarrying.

Regardless of the industry, micro-entrepreneurs require many of the same skills to thrive equally as their larger counterparts. 

In time, with a proper business plan, and professional assistance, including acute initiative and commitment like any larger business—your micro SME may later grow beyond your original foundation moving forward.

Is Micro SME important for our economy?

According to the Department of Statistics, there are 98.5% or approximately 907,065 of business establishments in Malaysia are SMEs. 

In 2019, the contribution of SMEs to GDP has risen to 38.9% or close to RM552.3 billion as compared to RM522.1 billion in 2018.

Over the last few decades, Malaysia’s economy has transformed tremendously from its reliance on raw materials exports such as rubber and tin to striving on becoming an industrialised nation. 

And it is worth noting that a majority of 78.5% are micro SMEs that contribute significantly to our country’s employment and economic growth.

The challenges faced by Micro SMEs

Although micro enterprises constitute the largest component of SMEs in Malaysia, these entities are also often seen as risky businesses. 

There are multiple issues facing micro SMEs in Malaysia and most of them encountered similar challenges. These include financing, human resources, information technology, managerial inefficiency, bureaucracy, market accessibility and competition, among others.

Generally, most micro SME owners start their businesses at home. They have the business idea but they lack a proper business plan and reliable resources. 

A business plan is important because it helps you to understand the current market situation, potential competitors, trends and risks. From there, business objectives can be envisioned and future challenges can also be identified.

Micro SMEs consist of less than five full-time employees which include you the owner. And because most started their micro businesses remotely, there is a shortage of skilled workers thus bringing forth managerial and technical inefficiency. 

It is an undeniable fact that these challenges are affecting the growth and contribution of micro SMEs in Malaysia. Micro SMEs would also be wiped out if there is no increase in their competitiveness in today’s ever-changing world of globalization.

Running a business is difficult if you don’t have enough funding or capital. Fundings are necessary to help finance your business inception, operational expenses and more. 

Predominantly, this issue can be considered the primary challenge faced by micro SME entrepreneurs. Some may have strong financial backups where capital can be easily obtained, but some may not be as lucky and we understand that.

Where can Micro SME owners take up funds?

This thus brings us to where and how you as a business owner can get your micro SME loan in Malaysia. 

While most micro SME loans can be found offered by commercial or industrial banks, you can opt for other service financial providers too such as the Development Financial Institutions (DFI) which are financial services providers that offer targeted financial assistance and are backed by the government, including Government Funding/Grants.

Development Financial Institutions (DFI)

  • Bank Rakyat
  • Bank Pembangunan Malaysia Berhad
  • Agrobank
  • SME Bank
  • BSN
  • EXIM Bank

Government Funding/Grants

  • Soft Loan Schemes for Services Sectors
  • Soft Loan for SMEs
  • Tabung Usahawan Siswazah (TUS)
  • Young Entrepreneur Fund (YEF)
  • Tabung Pembangunan Pengangkutan Awam
  • Bumiputera Enterprise Enhancement Programme
  • SME Emergency Fund
  • Business Start-Up Fund (BSF)
  • TEKUN Financing
  • Skim Kredit Pengeluaran Makanan (SKPM)
  • Rural Economy Funding Scheme (SPED)
  • PROSPER Usahawan Muda (PUMA)

Why should I apply for Micro SME loans?

You can apply for micro SME loans to start your own business or the loan can come as a targeted assistance program to assist aspiring micro-entrepreneurs at any stage of their business venture. 

Let’s take a look at the scenarios below:

Scenario 1 - Startups

Hazli is an entrepreneur who wanted to start a printing business. He needs to take up a micro SME loan to kickstart his company, but he doesn’t know how and which micro SME loan is the best fit for his business. 

For startups like Hazli, he can apply for the MIDF Soft Loan Scheme for Small and Medium Enterprises where he can borrow as low as RM50,000 up to RM3 million with repayment terms of up to 7 years. The facility also offers a flat interest rate of 4% per annum.

Scenario 2 - Natural disaster

Due to the recent flood incident, Hakim’s manufacturing business has taken a toll. He is having a problem ensuring his business won’t collapse. 

He then proceeds to apply for a micro SME loan that fits his requirements which is the MIDF SME Emergency Fund with a minimum loan amount of RM50,000 up to RM100,000 with a flat profit rate of 3% over 5 years tenure. He can even use the capital to refurbish his business premise!

Scenario 3 - Expansion

Basque burnt cheesecake business owned by Mak Cik Kiah is getting more popular among the people of Klang Valley. 

She needs more equipment and workspace in order to cope with the high number of orders. Thus, she proceeded to apply for Capital by Boost Credit with financing up to RM100,000 for 12 months’ tenure and a profit rate of 18% per annum flat.

Which is the best Micro SME loan in Malaysia?

Commercial bankBSN Microplus
Financial services companyCapital by Boost Credit
Development financial institution

Ready to kick start your micro business? Head over to our online business loan where you can compare and apply for the best micro SME loan for your next business endeavour.

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