Malaysia’s SME Financing Conditions Remain Supportive, but Businesses Must Keep Adapting, BNM Governor Says

KUALA LUMPUR, AUGUST 2026 — Financing conditions for Malaysia’s small and medium enterprises (SMEs) remain generally conducive, with banks and development financial institutions continuing to provide funding to viable businesses, Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour said.

Speaking at the recent CGC Awards 2025, Abdul Rasheed said Credit Guarantee Corporation Malaysia Bhd (CGC) has played an important complementary role in supporting the SME ecosystem. Since its establishment, CGC has facilitated more than RM103 billion in guarantees and financing for over 544,000 SMEs.

However, he stressed that financing figures alone do not provide a complete picture of the challenges facing Malaysian businesses. SMEs must continue adjusting their operations, strengthening capabilities and improving productivity because temporary financial assistance cannot serve as a permanent solution to recurring economic shocks.

Many SMEs continue to deal with higher input costs, shrinking profit margins, supply-chain disruptions and delayed customer payments, which are putting additional pressure on working capital and testing business resilience.

Abdul Rasheed said targeted assistance remains important during periods of disruption because it can help otherwise viable businesses manage temporary cash-flow problems. Nevertheless, companies must ultimately develop stronger business models and improve their ability to withstand future shocks.

The current business environment is also being reshaped by geopolitical uncertainty, rapid technological developments and increasingly frequent climate-related disruptions. These factors directly affect SME operating costs, supply chains, customer behaviour and overall competitiveness.

BNM believes SMEs will play an increasingly significant role as Malaysia works towards becoming a more productive, competitive and sustainable economy.

According to Abdul Rasheed, the key question is no longer simply whether financing exists, but whether financing solutions can evolve alongside changes in business models and accurately reflect the risk profiles of individual SMEs.

Although funding opportunities are available within Malaysia’s financial system, some viable SMEs still find it difficult to obtain financing because their growth potential may not be fully captured through conventional credit-assessment methods.

Abdul Rasheed said financial institutions should broaden access to financing by looking beyond traditional borrower groups, established industries and conventional collateral requirements as Malaysia moves further up regional and global value chains.

He said businesses should be assessed more comprehensively by taking into account factors including cash flow, transaction histories, payment patterns and supply-chain information, rather than relying primarily on collateral and traditional financial statements.

Such an approach could give lenders a clearer view of a company’s actual business performance and potentially improve financing access for SMEs whose prospects may not be properly represented by conventional credit indicators.

BNM also emphasised that improved access to financing alone will not guarantee long-term SME success.

Abdul Rasheed said sustainable business growth also depends on higher productivity, stronger management capabilities, greater technology adoption and access to new markets.

The message underscores the need for Malaysia’s SME financing ecosystem to develop alongside changes in the wider economy. While banks, development financial institutions and organisations such as CGC continue providing financial support, businesses themselves will need to become more adaptable and productive to remain competitive amid evolving economic pressure.