Securing financial resources for small and medium contracting firms in Malaysia
Loading...
Date
2008-06
Authors
Lau, Anna Siew Lin
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
Small and medium enterprises (SMEs) researchers often argue that SME are
characterised by lack of capital and are unable to access the same kinds of growth
funding. It is also indicates that debt capital is the most important capital source for
construction firms. This study examines the loan offered by commercial banks and
government agencies to small and medium contracting firms. Specifically, it looks
into the loan availability offered by commercial banks and government agencies as
well as the characteristics and procedures in getting the loan. Additionally, loan
preferences and the reasons of preferences as well as the problems faced in obtaining
and repaying the loans by the small and medium contracting firms are explored. Both
qualitative and quantitative methods were adopted for two different sample
populations, i.e. bank officers and contractors. Data was collected and triangulated
using interviews (bank officers), postal questionnaires (contractors) and secondary
sources. Four government agencies and 13 commercial banks were interviewed.
Postal questionnaires were sent out to 500 small and medium contracting firms all
over the Peninsular Malaysia, and 51 companies responded. Results showed that all
financial institutions have their own financing programmes for the small and medium
contracting firms. Majority of the responding companies preferred loans from
commercial banks compared to government agencies. Bumiputera-Commerce Bank
and Malayan Banking are the most preferred institutions by the small and medium
contracting firms. The reasons are 'cooperative' loan officer, speed and efficiency of the services and shorter application approval period. Responding companies which
opted for government agencies cited flexible collateral requirements followed by
competitive interest rates. More than half of the responding companies have problem
in obtaining loan from both financial institutions. Delay in loan processing time was
cited as the most frequent problem faced from both commercial banks and
government agencies. Responding companies faced problem in repaying their loans
due to delay in receiving progress payments from clients.
Description
Keywords
Small and medium enterprises (SMEs)