Starting a new business in Malaysia iis not without its difficulties, especially during this challenging time. It takes a lot of effort to make it work.

But entrepreneurs who want to start their first business will be glad to learn there are a variety of financing options available. Here are a few options to choose from.

1. Friends and family

Many successful startup founders have relied on the trust of friends and family for initial rounds of capital. This approach is valid because most other financing options often have a catch: investors watch your every move, while conventional loans may have heavy conditions that you face later on.

Friends and family members are more lenient in this sense, even if you structure a mutual agreement based on payback or revenue splits. While it’s a good idea to diversify your financing streams down the line, this is a good option for those who want to test the waters with minimal risk.

It’s nevertheless important to remain professional in your approach. Draw up projection plans, be specific with your asking amount, and be accountable for every ringgit. Plan out a strategy based on the capital you are targeting.

List down costs for advertising and marketing, expenses to be expected, and figures for production processes. Finally, set out a timeline for how you intend to use the money, and at what point you expect to see returns of some kind.

2. SME financing programmes

Malaysia’s private sector presents a long list of financing opportunities in the form of SME programmes from various institutions. The SME Bank Business Accelerator programme, for instance, supports the growth of startups and small and medium enterprises in need of capital.

Its offer starts at RM50,000 and ends at RM1,000,000, and can be used for financing working capital or fixed asset purchases. It comes at a borrowing period of between seven and 10 years.

Another programme is BSN Microplus, initiated by Bank Simpanan Nasional. It is aimed at the micro- or small-business range and is suitable for companies that focus on major sectors like service, retail, wholesale and manufacturing.

Microplus grants applicants a cash range between RM50,000 and RM250,000 with a borrowing period of one to seven years.

3. Government-based grants

Government-based grants are aimed at helping businesses that focus on helping the community, and usually require no repayment.

The Tekun National Agency, managed by the Ministry of Agriculture and Agro-based Industry, offers financing schemes aimed at specific sectors; while the Malaysia Digital Economy Corporation’s Digital Content Fund was designed to help creative content-production agencies.

The Malaysian Technology Development Corporation, meanwhile, focuses on the commercialisation of technology-based businesses, or the implementation of technology throughout local business communities. And the Cradle Fund Sdn Bhd Agency has helped grow more than 1,000 Malaysian tech-based startups across multiple verticals and sectors.

4. Conventional loans

Conventional loans are the most mainstream way to seek financing, and government-based loans are at the forefront of the options out there. The main difference between loans and grants is that loans may have payback requirements, while grants are often free of repayment obligations.

An example of a loan is the Young Entrepreneurship Fund, which is offered by SME Bank and focuses mainly on venture capital funds or working capital for companies. The loan offer can go up to about RM100,000 and there is an interest rate set at 5%.

The Graduate Entrepreneur Fund is similar but bigger in its offering, with a maximum loan size of RM500,000 and an interest rate of about 4%.

5. Crowdfunding and P2P lending

A more recent alternative to loans and grants is the crowdfunding and peer-to-peer lending options.

Crowdfunding is essentially pitching your idea to the mass public in hopes of obtaining large monetary contributions from many participants.

Among the many options available are pitchIN, a Malaysian-made platform that holds a record for the most number of backers for a single project, as well as MyStartr, a rewards-based platform that focuses more on games, art, design, music and filmmaking.

6. Financing from venture capitalists

A venture capitalist, also known as a private equity investor, basically works to provide specific capital for companies with the potential to grow big and grow fast.

There’s a mutual interest involved in these arrangements because venture capitalists invest in your startup in exchange for an equity stake. This means they essentially become your business partners, and guide you towards objectives based on your agreement with them.

Small companies with big ideas that are looking to expand should consider this approach. Just be sure you understand how it works as venture capitalists will govern a large part of your company’s future and direction.

7. Angel investors

Right beside the venture capitalists is the angel investor, often seen as the less common and more pleasant option of the two.

These are usually high-net-worth individuals who back startups with funding, giving support in the initial phases of development that are conventionally the hardest to receive backing from other financing parties.

Angel investors might fund you in exchange for ownership equity or a form of convertible debt. Sometimes, they provide financial support with few conditions of repayment. Count yourself lucky if you find an angel investor to back your startup.

This article first appeared in MyPF. Follow MyPF to simplify and grow your personal finances on Facebook and Instagram.