Bank Negara Offers RM200m Flood Relief Financing Aid for MSMEs

Under the Disaster Relief Facility 2022 (DRF 2022), Bank Negara Malaysia (BNM) has announced the availability of RM200 million in financing aid for micro, small, and medium enterprises (MSMEs) affected by the recent floods.

The DRF 2022, which will be available from 27 December until it is fully utilised, will help MSMEs cover the costs of repairs or replacement of assets for business use, such as plants and machinery destroyed by floods, as well as working capital.

The DRF 2022 is open to MSMEs, with a maximum financing amount of RM500,000 per SME and RM75,000 per microenterprise.

According to BNM, the financing tenure is up to five years, with a six-month moratorium on both principal and interest/profit payments. The financing rate is up to 3.50% per annum, inclusive of any guarantee fee.

The central bank stated that affected enterprises can apply to participating financial institutions, including commercial banks, Islamic banks, and development financial institutions regulated by BNM.

If businesses face any issues with the facility mentioned above, they should reach Bank Negara Malaysia via bnm.gov.my/LINK.

The public can contact their financial institutions by visiting their respective websites for more information.

Bank Negara Malaysia. © CEphoto, Uwe Aranas

What you need to know about DRF 2022

1. What exactly is DRF 2022?

DRF 2022 is a funding facility established by BNM to help MSMEs devastated by the recent floods recover their finances and resume business operations. The purposes of DRF 2022 financing are for:

Repairs or replacement of assets for business use (e.g. machinery and plants) that floods have damaged; or
Working capital.

Financing should not be utilised to refinance existing credit or financing facilities.

2. Who is eligible to apply for DRF 2022?

Flood-affected MSMEs in districts designated as flood disaster regions by the National Disaster Management Agency (NADMA).

SMEs and micro-enterprises can get the information through NADMA's Portal Bencana at https://portalbencana.nadma.gov.my/en/disaster-information.

3. Under the DRF 2022, what is the maximum financing amount and tenure for MSMEs?

MSMEs that meet the criteria would receive financing up to RM500,000 per SME and RM75,000 for micro-enterprises.

The financing tenure is up to 5 years, including a 6-month moratorium on both principal and interest/profit payments.

4. What is the financing rate?

The maximum effective financing rate, including the guarantee fee, is 3.50% annually.

5. Which banks can SMEs and micro-companies apply for financing?

Affected enterprises can seek funding through BNM-regulated participating financial institutions (PFIs), including commercial banks, Islamic banks, and development financial institutions.

6. How can SMEs and micro-businesses determine if they're eligible for funding under the DRF 2022?

Eligible SMEs and micro-businesses should contact the PFIs to determine if they qualify for the facility. The PFIs will evaluate all funding applications.

7. When will the DRF 2022 be available?

The facility will be open from 27 December 2021 until fully utilised (or until further notice, depending on the flood situation).

8. What can an MSME do if its application is rejected?

If an application is denied, the MSME should take the following steps:

Get clarification from the PFI regarding the reason(s) of the rejection;
Get financing advice from MyKNP (Khidmat Nasihat Pembiayaan), which offers advice and recommendations on improving the eligibility for future financing and alternative sources of funding (www.myknp.com.my); or
Contact BNM's eLINK at bnm.gov.my/LINK for more information.

9. Do MSMEs need to provide collateral to receive financing under the DRF 2022?

No. The DRF 2022 does NOT require collateral.

10. How long will it take for PFIs to approve an application?

PFIs will process the applications within 14 days after receiving the applicants' complete documentation.

Sources: BERNAMA & BNM