Qualifying Criteria

Qualifying criteria are the set of requirements that businesses need to meet in order to be eligible for a business loan in Malaysia. Lenders use these criteria to assess the creditworthiness and repayment capacity of borrowers. Here are the common qualifying criteria for business loans in Malaysia:

• Business Age and Legal Status:

  • Typically, your business should have been in operation for a minimum period to demonstrate stability. This requirement varies but often ranges from 6 months to a few years.

  • You should have a legal business entity registered in Malaysia, such as a sole proprietorship, partnership, or private limited company.

• Minimum Revenue:

  • Lenders may require a minimum annual or monthly revenue to ensure that your business generates sufficient income to repay the loan.

  • The required revenue level can vary based on the loan amount and type.

• Creditworthiness:

  • Your personal and business credit history will be evaluated. A strong credit history improves your chances of loan approval.

  • Example: A business with a consistent track record of repaying debts and bills on time is more likely to qualify.

• Financial Health:

  • Lenders assess your financial statements, including balance sheets and income statements, to evaluate your business's financial health.

  • Positive indicators such as healthy profits and manageable debt levels enhance your eligibility.

• Purpose of Loan:

  • Some lenders may require you to specify the intended use of the loan funds. The purpose should align with the type of loan you're applying for (e.g., expansion, working capital, equipment purchase).

• Collateral:

  • If the loan amount is substantial, lenders may require collateral as security. This could be property, equipment, or other valuable assets.

  • The value of the collateral should meet or exceed the loan amount.

• Business Plan:

  • A well-drafted business plan can demonstrate to lenders that you have a clear strategy for using the loan and repaying it.

  • Your plan should outline the market opportunity, financial projections, and repayment strategy.

• Personal Guarantee:

  • As a business owner, you may be required to provide a personal guarantee, making you personally liable for the loan in case of default.

• Industry and Business Type:

  • Some lenders may have preferences for certain industries or business types. Certain industries might be considered riskier than others.

• Legal and Regulatory Compliance:

  • Your business should be compliant with Malaysian laws and regulations, including tax filings and licenses.

  • Non-compliance could negatively impact your loan eligibility.

• Debt-to-Income Ratio:

  • Lenders assess your debt-to-income ratio to determine if your current debt obligations are manageable in relation to your income.

It's important to note that qualifying criteria can vary based on the lender and the specific loan product. Meeting these criteria enhances your chances of loan approval, while not meeting some of them might not necessarily disqualify you. As different lenders have different requirements, it's advisable to consult with multiple lenders, prepare your documents thoroughly, and consider seeking assistance from financial advisors or consultants to increase your chances of securing the right business loan for your needs in Malaysia.

If you are serious about getting a bank loan to facilitate your business growth, I’d love to have a 30-minute conversation with you. Just click the button below and it will link to my calendar. Choose the date and time that best fits you and I will contact you.