Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEs• What level of security you can offer and how the lender will view the value ofthe security (real property security, compared with business assets, is likely toresult in a lower interest rate margin being charged); and• How the lender will assess ”risk” for your business.This evaluation will help you better match your requirements and limitations to thespecific “guidelines” for particular alternative debt funding.When choosing the appropriate fi nancial product for your business, it is importantto consider the impact of the features as well as the nature of the products. Insome circumstances, borrowers can structure their loan with a mix of fi xed/variable/capped and other variations of interest charges. If specifi c featuresare important to you based on your circumstances, you may need to look atalternative debt providers until you fi nd the right fi nance for you. You may fi nd,however, that your circumstances may limit the debt products available for yourbusiness.It can often be diffi cult for SME owners to evaluate debt product options.Lenders can have different names for similar products, and structure the terms,conditions and fees differently.TIPEnsure that the type of fi nancing undertaken matches the reason forseeking fi nance. A general rule of thumb is to match the term of the loanwith the length of the life of the asset you are funding94chapter 7-13 p79-181 Eng.indd 948/15/11 5:02:56 PM