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Commercial Loan Malaysia

When it comes to business and financing, there are numerous ways to fund a startup. For project funding, capital injection, operation fund, debts repayment and company expansion, find out which commercial loan Malaysia is the best for your company.

Commercial Loan Malaysia

Commercial loan refers to any of loan offered by lenders to help an individual or business with some sort of financing. These loans are generally backed by some sort of collateral on the part of the borrower, which allows the lender to receive some sort of recompense if the loan is defaulted. Such loans may be used by businesses that are just starting out, or any entity that needs immediate funding it cannot provide itself. (Jim B, 2022) It can also be referred to as “Business Finance” or “Business Funding” . If a business is looking to expand without heavily impacting on cash flow, commercial funding could be a viable options. Commercial loan is loaned to a business – generally used by companies to buy equipment or grow their business. 

Why Seek for Commercial Loan Malaysia?

Commercial loans are granted to variety of business entities, usually to assist with short-term funding needs for operational cost or for the purchase of equipment to facilitate the operating process. In some instances, the loan may be extended to help the business meet more basic operational needs, such as funding for payroll or to purchase supplies used in the production and manufacturing process (Will Kenton, 2020). Commercial loan is typically funded by a financial institution such as a bank – used to fund major capital expenditures and operating costs. Generally, companies have to provide with their bank/financial statement to prove their ability to repay.

According to (Hannah Hottenstein, 2022), there are many benefits to getting a commercial loan for both new and existing business owners such as :

  • Lower interest rates, which can help you stay on budget
  • Fixed repayment periods, giving you more predictability
  • Lower overhead because large banks fund these loans
  • Quick turnaround time for getting approved
  • A wider range of funding options than traditional loan

Small businesses take out commercial loan with the hope of using borrowed capital to become more profitable. Loans can source not only from banks, but other sources too such as public funds and private investors. Depending from where the loan is coming from, borrowing money can be dangerously expensive, including interest and fees that are associated with every loan. To help resolve the high cost of business expansion, SMEs can now expand their business capacities with BNM Funding Scheme by OCBC Bank. To find out if you are eligible to apply for BNM Funding Scheme, click here.

Process for Securing a Commercial Loan Malaysia

The process in acquiring for commercial loan my be vary depending on the lender. However, the general process in securing one are as follows :

Pre-Approval (Qualifying Process)

Bank will evaluate the financial history of the business. During this process, the bank can get rough idea of how much the business would be able to borrow.

Loan Application

The business must complete and submit the loan application. In the application usually required the financial statement or any related document from the last three years.

Review Of The Loan Application Process Package

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Loan Underwriter / Loan Committee

If the application is deemed appropriate, a formal credit application is submitted to a credit adjudicator - who will later on review all information and decide whether to decline or approve the loan.

Terms Sheet

If approved, the processor will present the company with a term sheet - a formal document that outlines the parties involved, amount of financing, the interest rate of the loan etc. After reviewing and signing a letter of intent, payment may be required for third-party report e.g., appraisal reports.

Loan Package And Closing Documents

Upon completing the third-party reports, the complete loan application package is resubmitted to the loan underwriter for final approval. Once approved, the business is required to sign finalised loan documents.

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