Key takeaways
- Micro Financing on microLEAP ranges from RM1,000 to RM50,000, with tenors from 6 to 36 months, and is designed to support Malaysian micro and small businesses with their financing needs.
- Eligible applicants must operate a Malaysian-registered business with at least six months of operating history. The application process is fully online.
- Credit decisions for Micro Financing applications are typically made within 3 to 5 working days, subject to the completeness of documentation and the outcome of the credit assessment.
- All financing is subject to eligibility, credit assessment, and approval. Not every applicant will qualify for the maximum financing amount.
- microLEAP offers both Shariah-compliant and Conventional Micro Financing options. Eligible Micro Financing Notes also include Personal Accident insurance coverage of up to RM50,000 for the Issuer, subject to the applicable terms and conditions.
Introduction
A small business that needs RM10,000 to replenish inventory or manage a short-term cash flow gap may not always require, or qualify for, a larger financing facility.
For many micro and small businesses, access to smaller financing amounts can be just as important as access to larger facilities. This is where Micro Financing can play a role.
Micro Financing is designed to provide smaller-ticket business financing for micro enterprises, sole proprietors, and small businesses that require access to working capital or other business-related financing.
This article explains how Micro Financing works on microLEAP, how much a business may apply for, who may qualify, how the application process works, and what businesses should consider before applying.
What is Micro Financing?
Image: What Micro Financing is and who it suits.
Micro Financing refers to smaller-scale business financing designed to support micro enterprises and small businesses.
It may be suitable for businesses seeking financing below RM50,000, particularly where the financing is intended to support working capital requirements, business operations, inventory purchases, or other legitimate business purposes.
Micro Financing is not a personal financing product, a bank financing product, or a grant. Through microLEAP, financing is facilitated through a peer-to-peer (P2P) financing platform that connects eligible businesses seeking financing with Investors.
At microLEAP, Micro Financing is available through both Shariah-compliant and Conventional financing structures, subject to the applicable eligibility requirements and terms.
For businesses that require a smaller financing amount, Micro Financing may provide an alternative source of funding to consider alongside other available financing options.
How much can a business raise through Micro Financing?
On microLEAP, businesses may apply for Micro Financing ranging from RM1,000 to RM50,000, with financing tenors ranging from 6 to 36 months.
The applicable charges include:
- A one-time application fee of RM50
- A one-time platform fee ranging from 2% to 8%, depending on the financing tenor and applicable terms
The financing amount approved will depend on several factors, including the business profile, affordability, financial performance, supporting documentation, and the outcome of the credit assessment.
Businesses should therefore apply for an amount that is appropriate for their actual financing needs and repayment capacity.
The final financing amount and terms are subject to assessment and approval. Not every applicant will qualify for the maximum amount available.
Who qualifies for Micro Financing in Malaysia?
Image: Who qualifies for Micro Financing through microLEAP.
microLEAP's Micro Financing is available to eligible Malaysian businesses that are registered and have been operating for at least six months.
Applicants must generally be post-revenue and able to demonstrate an established level of business activity and financial viability.
Eligible business structures include:
- Sole proprietorships
- Partnerships
- Limited liability partnerships
- Private limited companies, or Sdn Bhd companies
Eligibility applies to all business types, unless restricted by SC regulations. All applications remain subject to microLEAP's eligibility requirements, credit assessment, and approval process.
What documents does a business need to apply?
The documents required may vary depending on the business and the assessment requirements. Generally, applicants may be required to provide:
- Business registration documents to confirm that the business is registered in Malaysia
- Bank statements demonstrating recent business activity
- Identity documents for the business owner and relevant guarantors
- Financial records or other supporting documents relating to business activity and revenue
Providing complete and accurate documentation can help facilitate a smoother assessment process.
Who is Micro Financing best suited for?
Micro Financing may be suitable for:
- Micro enterprises and sole proprietors seeking smaller financing amounts
- Post-revenue businesses with an established operating history
- Businesses with working capital or short-term business financing requirements
- Businesses seeking an alternative financing option alongside traditional financing facilities
- Businesses that require financing below RM50,000
The suitability of any financing facility will depend on the individual circumstances, financing requirements, and repayment capacity of the business.
How long does Micro Financing approval take?
According to microLEAP's current process, a credit decision for Micro Financing applications is typically made within 3 to 5 working days, subject to the completeness of the documentation submitted and the outcome of the assessment.
The actual timeline may vary depending on the complexity of the application and whether additional information or supporting documents are required.
Submitting complete and accurate documentation at the outset may help reduce the need for follow-up during the assessment process.
Approval and disbursement timelines are not guaranteed and remain subject to the completion of the relevant processes and requirements.
How is P2P Micro Financing different from other Micro Financing options?
The main difference lies in the financing structure.
P2P financing connects businesses seeking financing with Investors through a regulated platform. microLEAP is registered with the Securities Commission Malaysia (SC) as a Recognised Market Operator (RMO). Investors and businesses can verify the platform's regulatory status through the Securities Commission Malaysia register.
microLEAP does not provide financing from its own balance sheet. Instead, it facilitates the financing process between eligible Issuers and Investors who choose to invest in the relevant Investment Notes.
The application and assessment process is conducted digitally, subject to the platform's applicable processes and requirements.
Eligible Micro Financing Notes also include Personal Accident insurance coverage of up to RM50,000 on the Issuer, administered by microLEAP's insurance partner, Two Degrees Sdn Bhd, subject to the applicable terms, conditions, eligibility requirements, and insurance coverage.
Government-backed Micro Financing schemes, bank financing, and P2P financing may operate under different structures and have different eligibility requirements.
Businesses should compare the available options based on factors such as:
- Eligibility requirements
- Financing amount
- Financing structure
- Tenor
- Fees and charges
- Repayment obligations
- Application and approval process
- Suitability for the business's financial circumstances
No single financing option will necessarily be suitable for every business.
How does a business apply for Micro Financing on microLEAP?
Image: The five steps to apply for Micro Financing on microLEAP.
The application process is fully online and generally involves the following steps:
1. Create an account and complete verification. The applicant creates a microLEAP account and completes the relevant identity verification requirements.
2. Submit the financing application and supporting documents. The business submits its financing application, including the requested financing amount and tenor, together with the required supporting documentation.
3. Credit assessment. microLEAP reviews the application and assesses the business based on the relevant credit and eligibility criteria.
4. Review and accept the financing offer. If the application is approved, the business will receive the proposed financing terms for review. These may include the approved financing amount, tenor, applicable profit or interest rate, and fees. The business may then proceed to accept the offer and execute the relevant documentation electronically.
5. Funding and disbursement. Once the applicable funding requirements have been met, including the minimum funding threshold of 80% of the financing target where applicable, the financing proceeds will be disbursed in accordance with the approved financing structure and relevant agreements. Depending on the financing arrangement, funds may be disbursed directly to the business or to approved suppliers.
All applications remain subject to assessment, approval, and the completeness of the documentation provided.
Frequently asked questions about Micro Financing in Malaysia
What is the minimum and maximum amount for Micro Financing in Malaysia?
Through microLEAP, businesses may apply for Micro Financing ranging from RM1,000 to RM50,000. The amount approved will depend on the applicant's eligibility and the outcome of the credit assessment. Not every applicant will qualify for the maximum amount.
Can a business get Micro Financing if the bank financing application was unsuccessful?
Possibly. P2P financing platforms may apply different assessment criteria from banks. However, an unsuccessful bank application does not guarantee approval for P2P financing. Every application submitted to microLEAP is subject to its own eligibility requirements and credit assessment.
Can newly registered businesses apply for Micro Financing?
Businesses generally need to demonstrate at least six months of operating history before becoming eligible for Micro Financing. A newly registered business that does not yet meet this requirement may need to establish a longer operating and trading history before applying.
Can sole proprietors apply for Micro Financing?
Yes. Sole proprietorships are among the eligible business structures that may apply, subject to meeting the applicable eligibility requirements and successfully completing the assessment process.
Do I need to provide collateral for Micro Financing?
Property collateral is not mandatory for Micro Financing. However, depending on the assessment and financing structure, certain guarantees or other forms of security may be required. A minimum of two personal guarantors may be required, together with a corporate guarantee where applicable. All security and guarantee requirements remain subject to assessment and the applicable financing terms.
What is the difference between Micro Financing and an SME loan?
Micro Financing is generally designed for businesses seeking smaller financing amounts, with microLEAP offering amounts from RM1,000 to RM50,000. Larger SME financing facilities may involve higher financing amounts and may have different eligibility requirements, documentation requirements, and assessment criteria.
The most suitable option will depend on the size and needs of the business, the amount required, and its ability to meet the relevant financing obligations.
Can Micro Financing be used for working capital?
Yes. Subject to the purpose of the financing and approval requirements, businesses may use Micro Financing to support working capital requirements. This may include inventory purchases, operating expenses, or managing short-term cash flow needs.
Conclusion
Micro Financing can provide an alternative financing option for micro and small businesses that require access to smaller financing amounts to support their operations and growth.
Through microLEAP, businesses may apply for financing ranging from RM1,000 to RM50,000, with tenors from 6 to 36 months. Eligible businesses must generally have at least six months of operating history, and the application process is conducted fully online.
However, financing should always be considered carefully. Businesses should assess whether the financing amount, tenor, costs, and repayment obligations are appropriate for their financial circumstances and repayment capacity.
All financing applications are subject to eligibility, credit assessment, and approval. Approval is not guaranteed, and not every applicant will qualify for the amount requested.
For more information on the applicable terms and conditions, please refer to microLEAP's Terms and Conditions.
For a complete guide to P2P financing options for small businesses, see P2P Financing for Small Businesses in Malaysia: A Complete Guide.
Regulatory and advertising disclosures
This advertisement has not been reviewed by the Securities Commission Malaysia.
microLEAP PLT is registered with the Securities Commission Malaysia as a Recognised Market Operator to operate a P2P financing platform. Registration with the SC does not constitute a recommendation or endorsement by the SC of microLEAP, any financing product or any application.
Financing is subject to eligibility, identity and business verification, credit and compliance assessment, approval, achievement of the applicable funding threshold and completion of the required documentation. Approval, financing amount, rate, tenor, successful funding and disbursement are not guaranteed.
Applicable financing/profit rates, fees, taxes, charges and deductions will be disclosed in the relevant offer and final documents. Calculator results are estimates only and do not constitute an offer, approval or final financing terms.