BNM Announces Additional Funds to Boost SME Financing

Bank Negara Malaysia has announced an additional MYR 2.5 billion (USD 617 million) in funding to support small and medium enterprises (SMEs), reinforcing Malaysia’s policy push to widen access to credit—particularly for first-time borrowers and smaller firms that continue to face structural financing constraints.

The announcement forms part of broader measures outlined by Anwar Ibrahim in his 2026 New Year’s Message, which signalled increased public-sector support for SME financing alongside the introduction of a new credit guarantee scheme.

Scaling Concessional Financing for SMEs

In its statement, BNM confirmed that the additional allocation increases the total size of its SME concessional financing programmes to MYR 34.9 billion, up from MYR 32.4 billion.

These funds are channelled through participating financial institutions, with a strong focus on viable micro and small enterprises that struggle to access traditional bank credit due to limited collateral, short operating histories, or thin credit files.

The central bank noted that concessional facilities remain a critical policy lever for improving financial inclusion and supporting domestic economic resilience—especially in a higher-rate, more risk-sensitive lending environment.

Focus on First-Time Borrowers and New Ventures

A notable feature of the expanded funding is its explicit emphasis on first-time borrowers, including early-stage entrepreneurs and smaller SMEs that have historically been underserved by the banking system. These segments often sit at the intersection of higher perceived risk and limited data visibility, making them less attractive under conventional credit underwriting models.

By increasing the scale of concessional financing, BNM is effectively de-risking SME lending for banks while encouraging broader participation across the financial sector.

Shift Toward Guarantee-Based Support

Looking ahead, BNM also outlined a strategic shift toward guarantee-based financing mechanisms. The central bank aims to deliver MYR 10 billion in guaranteed financing over time, expanding coverage beyond traditional SME borrowers to include:

• First-time and thin-file borrowers

• New entrepreneurial ventures

• Smaller firms with viable business models but limited collateral

Guarantee-based schemes are increasingly viewed by regulators as a more scalable and capital-efficient way to unlock SME credit, particularly when paired with stronger risk assessment, data-sharing, and portfolio monitoring frameworks.

Implications for Banks and the SME Ecosystem

For banks, the expanded funding and future guarantees create both opportunity and obligation. Institutions will be expected to:

• Improve SME credit assessment beyond collateral-led models

• Strengthen monitoring of SME portfolios as lending volumes increase

• Balance growth objectives with prudent risk management

For SMEs, the announcement signals continued policy support at a time when access to finance remains a key bottleneck for growth, productivity, and digitalisation.

A Clear Policy Signal

BNM’s move sends a clear signal that SME financing remains a national priority, not only as an economic growth lever but as a financial inclusion imperative. By combining concessional funding today with a longer-term transition toward guarantee-based models, Malaysia is laying the groundwork for a more inclusive, resilient, and sustainable SME financing ecosystem.

As these programmes scale, execution will matter—particularly in how effectively banks, guarantee providers, and policymakers coordinate to ensure that funding reaches the intended segments without creating undue risk concentrations.