PETALING JAYA, Nov 11, 2014: To fast track financing accessibility to small and medium enterprises (SMEs), Credit Guarantee Corporation Malaysia Berhad (CGC) and Affin Bank Berhad (AFFINBANK) have collaborated to offer portfolio guarantee (PG) financing worth RM50 million.
This is CGC’s first PG with a distinctive risk-sharing mechanism feature. Under this agreement, AFFINBANK will absorb any eventual impaired loans in the first year of financing.
AFFINBANK, with its established credit prudency, is confident of the quality of its loans and has opted not to subscribe to guarantee cover for the first year of the loan bookings.
In doing so, it is able to offer a lower and competitive fee rate to its customers. This will enhance the development and bankability of SMEs in the country through CGC’s guarantee mechanism.
“We are proud to be working with CGC to offer this portfolio guarantee financing to SMEs and even more pleased that customers will enjoy competitive rates. At AFFINBANK, we are constantly looking out and developing new and innovative financial solutions and packages for our customers.
“This PG financing added to our suite of products will certainly help many SMEs to grow their businesses further and indirectly support the development of the SME industry in general,” said AFFINBANK Managing Director and Chief Executive Officer, Dato’ Zulkiflee Abbas Abdul Hamid at the signing ceremony today.
CGC President and Chief Executive Officer, Datuk Wan Azhar Wan Ahmad said that the PG financing will be advantageous to SMEs that desire to fulfil their working capital requirement, asset acquisition and capital expenditure, and it is expected to benefit about 170 SMEs for this first tranche.
“We are happy to note that our PG partnership will enable SMEs to gain quicker access to financing with speedier turnaround time in terms of approval and disbursement of loans as the applications are evaluated based on a pre-determined and simplified sets of criteria for loan eligibility,” added Datuk Wan Azhar.
The availability of CGC’s guarantee is up to maximum loan tenure of seven years from the date of CGC’s approval and the financing amount ranges between RM100,000 and RM500,000.
The financing rate is dependent on the borrower’s credit rating and will be determined by AFFINBANK’s credit evaluation standards as well as its targeted market segment.
“Additionally, this unique PG is expected to be largely taken up by SMEs in the construction and wholesale sectors, which may encounter difficulty in terms of access to financing which is critical for continuous growth,” Datuk Wan Azhar said.
Other distinct features of this PG for SMEs are the certainty in approval which is almost 100% based on past experience, low guarantee fees and hassle-free applications.
Datuk Wan Azhar said for this year, CGC had achieved its PG loan target of RM900 million and this amount had benefited 1,800 SMEs on the whole.
“In total from 2009, we have guaranteed over RM2 billion worth of PG loans through collaborations with various FIs,” he said, adding that CGC’s PG partnerships had benefited 5,900 SMEs.
He added that future collaborative ventures with AFFINBANK will include Wholesale Guarantee financing which will be aimed at aiding existing customers. In the near future, CGC is looking to explore new growth areas such as Bumiputera, Halal Traders, and Intellectual Property among others.
SME loan has been a business segment that AFFINBANK has been growing steadily each year, and currently contributes almost 20% of the bank’s total gross loans.
“We are targeting to grow this portfolio further as we see great potential in the SME segment. In addition to this new PG agreement with CGC, the bank is working towards providing more financing packages to add to our suite of products.
“However, it is not just about the number (of products) that we offer. At AFFINBANK, we believe in delivering more than a product. We deliver a trust in our service so that our customers and partners will continue to bank with us,” added Dato’ Zulkiflee.
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 RM52.9 billion since its establishment.
Today, CGC is well on track to achieve its financial sustainability agenda as envisaged under its business transformation plan. In the last four (4) years, CGC has registered an increase in its net profits ranging from RM15.6 million in 2010 to RM121.1 million in 2013. 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 since its establishment in 1972. The range of products and services were also expanded to cater to larger credit facilities required by medium-sized SMEs.
CGC’s support for SME’s 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 SME’s 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. To date, CGC had managed a total of 43 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.
SMEs wishing to obtain more information on CGC may call its Client Service Centre at 03-78800088 or visit www.cgc.com.my.