7 ways to get funding for your business

Starting a new business comes with its fair share of challenges. From registering your business to getting funding to kick-start your venture, it takes a lot of gumption to make it work, no matter what the challenges are.

For those looking to get their business funded, here are seven suggestions on how and where you can obtain funding.

1. Government grants and loans

Government grants and loans seem to be the top choice for many entrepreneurs seeking funding for their business. It may be because some government loans do not require a guarantor or collateral, have no profit rate, and do not impose a processing fee since the government has been actively encouraging innovation and entrepreneurship.

This is in line with Prime Minister Dr Mahathir Mohamad’s Vision 2020, which is to establish a prosperous society with an economy that is fully competitive, dynamic, robust and resilient.

As such, aspiring business owners can consider the following resources provided by the government:

  • TEKUN: Various schemes, including special entrepreneurship programmes for ex-military personnel and young professionals. Funding range: RM10,000 – RM100,000.
  • PROSPER: Bumiputera youths dabbling in various industries, including fashion, automotive, and photocopy. Funding range: Up to RM100,000.
  • PUNB: All types of businesses, including retailers and wholesalers. Funding range: Varies depending on the scheme.
  • TERAS: High performing Bumiputera companies. Funding range: Up to RM1 million.
  • SUPERB: Bumiputera youths. Funding range: RM500,000.
  • MARA: Various schemes available for businesses. Funding range: Varies depending on the scheme.
  • Yayasan Penjaja dan Peniaga Kecil 1Malaysia: Non-Bumiputera small-business owners. Funding range: RM5,000–RM20,000 (micro-credit scheme).
  • MyCreative Ventures: Entrepreneurs in the creative and arts industries. Funding range: Up to RM5 million.
  • Skim Pembangunan Francais: For franchisors looking to upgrade their business premises. Funding range: Up to RM100,000.
  • Cradle Fund Sdn Bhd: Malaysian start-ups. Funding range: Up to RM300,000 (Cradle Investment Programme 300/CIP300), up to RM800,00 (Direct Equity 800/DEQ800).
  • SME Bank: Malaysian SMEs. Funding range: RM100,000–RM750, 000 (Small Business Financing/SBF); RM50,000–RM1 million (Business Accelerator Programme/BAP).

2. Crowdfunding

The fastest way to reach out to people is through crowdfunding where individuals can support their favourite companies or projects through small contributions. Crowdfunding offers you the chance of finding funders and building a foundation for your business or cause.

These are some of the most popular crowdfunding platforms in Malaysia:

  • pitchIN
  • ata-plus
  • GoGetFunding
  • FundingSocieties
  • Actyvate
  • MyStartr
  • Ethis Ventures (Islamic crowdfunding platform)
  • LaunchGood (Islamic crowdfunding platform)

3. Angel Investors

An “angel” is a businessperson that provides financial backing to companies they think will prosper. In return, angels expect to share the financial rewards of the company they invest in.

One of the key benefits of getting angels to invest in your company is their direct involvement, in which they bring relevant experience that could help you expand your business.

Connect with the right angel investor in Malaysia through these platforms:

  • Angel Investment Network
  • Capital
  • BizAngel
  • Cradle Fund

4. Venture Capital

In the system of Venture Capital, a third party who’s funding your business will act as a partial owner of the company. Typically, venture capitalists have the majority shares of ownership. These are a few venture capital companies in Malaysia and South East Asia to consider:

  • NEXEA (NEXEA also has a complete list of VCs in Malaysia for later stage investment)
  • RHL Ventures
  • TBV Capital
  • 500 Start-ups
  • Vertex Ventures
  • Spiral Ventures

5. Friends and family

Besides getting endless support from your loved ones, securing funding from them for a business you’re thinking of starting would also be great. However, it could also ruin your relationship with them if you’re irresponsible. Always treat those you take loans from as business partners. Make sure you prepare a fair contract for everyone.

6. Self-funding

Self-funding could mean using your personal savings or selling your assets such as your car to generate cash for your business. If you’re planning to use this method, make sure you cover the basics like preparing an emergency fund for you and your family.

7. Small business loans

If you’re considering getting a loan from a bank, make sure you have a good credit score. While most banks offer small business loans, they grant these based on your credit history, bank statements and other relevant financial information.

This article first appeared in BBazaar.my

BBazaar Malaysia (BBazaar.my) is part of BankBazaar International, the world’s leading neutral online marketplace that helps people decide on financial products such as insurance, credit cards, fixed deposits, saving accounts, mutual funds and many more.