Banks being difficult with loans, says SME group

The Business Sustainability Taskforce Covid-19 says many new customers are seeing their loan applications rejected.

PETALING JAYA: A task force from a group of small and medium-sized enterprises (SMEs) and industries today accused banks of being difficult over loan applications for SMEs, warning that this could spell doom for some in the sector.

According to a survey by the task force, SMEs which have their loan applications approved are mostly existing customers.

Its spokesman Shahul Dawood said new customers are either given a maximum of RM250,000 or outright rejected.

“Why the discrimination?” he said in a statement, citing the survey which showed that some 76% of 4,073 SMEs and SMIs whose applications were approved were existing customers.

Some of them had even received calls from banks offering them new loans under the government’s recent stimulus package.

The survey by the Business Sustainability Taskforce Covid-19 also listed a “business as usual” attitude by banks when it comes to evaluating applications.

Based on the survey, Shahul said, banks were refusing to help companies whose financial cycle had yet to mature, or who were relatively new in the market.

He said banks were still using the central credit reference inference information system (CCRIS) and credit scoring system (CTOS), which he claimed was unfair in times of crisis.

CCRIS is a centralised system under Bank Negara Malaysia which collates data on outstanding loans and payment history over the past 12 months.

CTOS meanwhile is a leading credit reporting agency.

Shahul also claimed banks were taking their time to approve loans, with initial approval rates at only 5%. He said 65% of applications were still pending with some 30% rejected.

He urged the finance ministry and central bank to give clear directives to banks on approving loan applications so that they would be in sync with each other.

“This is important to inspire confidence among the SME community which is fast running out of cash and resources.”

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