Government plans soft loans for flood-hit SMEs

BREAKING NEWS by Chan Ching Thut

Petaling Jaya, March 9 -- The government is working on a proposal to introduce soft loans to assist businesses affected by floods, which struck several states earlier this year.

Although details are still under wraps at the moment, MALAYSIA SME^TM learned from several reliable sources that the government is likely to allocate RM10 million for this scheme.

No date is set for the announcement but a source says it will be done soon.

The planned soft loans will cover SMEs in the services sectors, manufacturing and manufacturing-related services. As for the scope of financing, it can be used for purchase of machinery and equipment, purchase of raw material and refurbishment of premises.

It is understood that maximum financing allowed will be up to RM100,000 with an interest rate of 3% per annum.

If the proposed soft loan goes as planned, it probably would be similar to the one that the government offered to SMEs in Johor, which was flooded in late 2006 and early 2007.

In the cover story of MALAYSIA SME^TM dated Feb 26 to Mar 11, SMEs and small business owners had called upon the government to provide assistance in the form of soft loans.

The report mentioned that the government offered flood relief loans for SMEs affected by the 2006 and 2007 flooding in Johor. Then, each SMEs were allowed to apply for loans of up to RM500,000 to be repaid in five years with an interest rate of 2%.

In late January leading up to the first week of February this year, heavy rainfall caused widespread flooding in Johor, Negri Sembilan, Malacca, Pahang and Sabah. Johor was the worst hit among five states, as the flood this year turned out to be worse than the one that struck less than five years ago.

According to media reports, over 47,000 people were evacuated to relief centres on Jan 31 when floods worsened in those states.

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