CGC Extends Financing to New Businesses

KUALA LUMPUR, June 2, 2014: On the forefront to stimulate the growth of start-ups, Credit Guarantee Corporation Malaysia Berhad (CGC) peaks amongst financial institutions as it moves to tackle the new businesses segment – generally viewed as high-risk within the financial sector, through its BizMula-i scheme.

BizMula-i direct financing scheme will provide uplift to the development of new businesses devoid of track records or collaterals, as start-ups play an important role in the country’s economic growth.

The underlying principle of the scheme is to encourage and nurture budding businessmen, who are equipped with viable business plans, strong market as well as business insight and a high entrepreneurship drive to succeed.

CGC President and Chief Executive Officer Datuk Wan Azhar Wan Ahmad said the Syariah-compliant scheme is unique because businesses will be directly financed by CGC, with financing ranging from RM50,000 to RM300,000 and repayment tenure of up to seven years.

He said it was crucial for new businesses to have the ease of access to hassle-free financing facilities as relying solely on the use of their own funds will be insufficient to sustain and strengthen their businesses.

“It is usually a challenge for new businesses with a lack of financial track records or collaterals to obtain financing for their new business. Therefore, the BizMula-i has been designed to address a current gap for this segment, which is perceived as high-risk borrower.

“The proposed initial portfolio encompasses the first tranche of RM30 million from CGC which may potentially benefit up to 600 new business,” he said when launching BizMula-i today.

He said BizMula-i is the first scheme in CGC’s series of initiatives to ensure that the operations of new businesses become successful and there are many more programmes being formulated, adding that over the years CGC has been instrumental in providing an assortment of financing options for SMEs.

“It is imperative that new businesses stay competitive in order to be able to focus on business growth right from the beginning. As such, the BizMula-i will be reasonably priced to assist in the management of cash flows of the SMEs during this vital period of growth.

“At the end of the financing tenure of seven years, some of these businesses might still be deficient of collaterals. Strategically, we will consider financing them under our existing guarantee schemes,’’ he said, adding that via direct financing, CGC will remain on the forefront of addressing the underserved and unleashing the full potential of such businesses in the country.

There are presently about 137,000 active businesses and companies that are in operation for less than three years, thus the need for financing convenience to be availed to them. Most of these businesses are run by those above 35 years old, accounting for 60% of the total SME business composition.

BizMula-i direct financing scheme from CGC is applicable to those aged 21 to 58, with a business license registered in Malaysia under a local authority, and an enterprise that comes under the definition of an SME as stipulated by the National SME Development Council (NCSC). They must be Malaysian-controlled or Malaysian-owned with at least 51% shareholding, and licensed or must have been in operations for less than three years. BizMula-i is directly available for application now at all of CGC’s 16 branches nationwide.

For more information on BizMula-i, please call the Client Service Centre at 03-78800088 or visit www.cgc.com.my.

About CGC

Credit Guarantee Corporation Malaysia Berhad (CGC) was established on July 5, 1972. Current shareholders are Bank Negara Malaysia (major shareholder) and commercial banks. The core business focus of CGC is to assist SMEs, especially those without or with inadequate collateral and track record to obtain credit facilities from financial institutions by providing guarantee cover on such facilities. CGC has cumulatively guaranteed more than 420,000 loans valued at close to RM52 billion since its establishment.

Today, CGC is well on track to achieve its financial sustainability agenda as envisaged under its business transformation plan. CGC has registered an increase in its net profits ranging from RM15.6 million in 2010 to RM160.8 million in 2012.

CGC, known as the ‘credit firm for the small man’ in its early years, focused on helping small enterprises in the agricultural, commercial and industrial sectors. As the Malaysian economy expanded over the years, the demand for CGC’s guarantee services also grew in tandem. The range of products and services were also expanded to cater to larger credit facilities required by medium-sized SMEs. CGC’s support for SMEs is not only confined to the provision of loan guarantees and financing facilities, but also credit information and credit rating services through its subsidiary Credit Bureau Malaysia. Through the Bureau, CGC assists SMEs to build a credit history and track record to enhance their credibility and bankability to secure financing on their own merit and at reasonable cost.

Other funds currently managed by CGC include the Green Technology Financing Scheme (GTFS) and the Bumiputera Entrepreneur Project Fund (TPUB-i) with a total allocation of RM3.5 billion and RM300 million respectively. CGC had managed a total of 42 guarantee schemes including 16 government-funded schemes. To date, 15 Islamic banks, 17 commercial banks and seven (7) development financial institutions (DFIs) are participating in CGC’s guarantee schemes, providing customers with a wide network of more than 2000 branches nationwide to avail financing.

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