One of the most pressing needs of start-up entrepreneurs is getting access to funds. Obviously, there are many options out there. But getting the right one is not easy.
At the most basic level, you can obviously consider finding the source of funds within your own means which will include the following:
- Personal savings – the easiest way to start as you don’t need to go through stringent loans application or evaluation processes.
- Family and friends – the next option to consider. Family and friends can be a double edge sword. While access to them is easy, it can get tricky if something turns sour. You probably would not want to jeopardize such relationship. It is advisable that you establish some form of agreement that states clearly on the ‘loan principle’ and commitment to pay back.
- Credit cards – this is an easy choice as well. Though, you need to handle it with care as credit card imposes high interest rate.
- Microloans and personal loans – many options are available from the local banks.
- Retirement savings – this is some option for those who are eligible to draw down on their retirement funds.
There are many government initiatives to nurture and develop entrepreneurs. As far as start-ups are concerned, the following options can be considered (as referenced from the SME Corp website):
- Soft loan schemes for service sector – The agency responsible for this fund is the Malaysian Industrial Development Finance Berhad (MIDF). The fund objectives are to aid with new start-ups creating new services and expanding existing services to higher value-added activities as well as improving productivity and efficiency in service delivery.
- Soft loan for SMEs – the agency responsible for this fund is the Malaysian Industrial Development Fund (MIDF). The fund objective is to help existing and new start up companies to finance their projects, fixed assets and working capital.
- Graduate Entrepreneur Fund – The agency responsible for this fund is the SME Bank. The fund objective is to support graduates to venture into entrepreneurship.
- Young Entrepreneur Fund – The agency responsible for this fund is the SME Bank. The fund objective is to support young entrepreneurs, aged between 18 – 30 years old to be involved in business.
- Bumiputera Enterprise Enhancement Program – The agency responsible for this fund is the SME Corporation Malaysia. The fund objective is to support potential Bumiputera SMEs with financial assistance and advisory services.
- SME Emergency Fund – The agency responsible for this fund is the SME Corporation Malaysia. The fund objective is to support SMEs affected by natural disasters by providing them soft loans to finance purchases of machinery and equipment, refurbishment of premises and working capital.
- Business Start Up Fund – The agency responsible for this fund is the Malaysian Technology Development Corporation. The fund objective is to encourage and facilitate the growth of technology entrepreneurs and new start-up companies.
- Angel Tax Incentive – The agency responsible for this fund is the Cradle Fund Sdn Bhd. The fund objective is to help technology based start-ups to raise funds by offering tax incentive to angel investors invested in these companies.
Sector-based funds and grants are also available that are slightly unique in comparison to the list of funds listed above; which will be covered in a separate article.
Have you tried to get access to any of the funds above?