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Micro Financing/Micro Financing-i (Islamic)
Micro Financing/Micro Financing-i (Islamic)
Shaun avatar
Written by Shaun
Updated over 10 months ago

What is Micro Financing/Micro Financing-i (Islamic)?

Funding Societies Micro Financing/-i (Islamic) is a business financing product that offers micro credit opportunities to SMEs. As a business owner, you can utilise the opportunities to maintain cash flow and enhance your business day-to-day.

We offer both Micro Financing (conventional) and Micro Financing-i (Islamic) product based on the business activities and needs of the SMEs.

What are the financing terms?

  1. Return rate

    Return rate is 0.8%-1.5% per month

  2. Principal financing amount

    Max up to RM 200k.

  3. Financing payment tenure

    We offer 3 - 18 months tenure

What are the charges do I have to pay? 

Micro Financing-i (Islamic)

  • Drawdown Fee: 5% of the approved financing amount, deducted upon disbursement.

  • Guarantee Fee: 5% of the approved financing amount, deducted upon disbursement.

We won't charge any fee if you decided to decline our offer.

Micro Financing(Conventional)

  • Utilisation Fee: 5% of the approved financing amount, deducted upon disbursement.

  • Guarantee Fee: 5% of the approved financing amount, deducted upon disbursement.

We won't charge any fee if you decided to decline our offer.

How much is the instalment per month?

Payment table (illustration) 

The instalment per month with different returns rate and tenure is as shown below:

What are the requirements to apply?

  • Sole proprietorship, partnership, or private limited companies registered with SSM

  • Minimum 30% local shareholding by Malaysians

  • Minimum RM 60,000 revenue per annum (or RM5,000 per month)

  • Minimum 6 months in operations

What are the documents required for credit assessment?

  • Copy of IC of all the directors 

  • Latest 6-month business bank statement

  • The Statement of Consent (for a credit check)

  • BE Form (optional)

Is there any compensation for delayed payments?

Micro Financing-i (Islamic)

Late Payment Charges which consist of Compensation (Ta’widh) and Penalty (Gharamah) will be charged subject to the following conditions:

  • For default payment before maturity date: Compensation (Ta’widh) may be imposed at the rate of 1% p.a. on the overdue payment and shall not be compounded.

  • For default payment after maturity date: Compensation (Ta’widh) may be imposed at the rate of 1% p.a. on the overdue balance (overdue principal and accrued profit). Funding Societies may charge both Compensation (Ta’widh) and Penalty (Gharamah) as Late Payment Charges at a maximum rate of 10% p.a.

Micro Financing (Conventional)

If you are late in making your repayments, the following fees/charges will be imposed：

  • Late Penalty Fee: RM200 per repayment cycle

  • Late Interest Fee: 0.1% per day (non-compounded) on the amount in arrears

Can I make an early settlement?

Early repayments are always encouraged, as SMEs are able to save more on interest and profit shared. We don't charge early repayment fee for any of our Islamic product.

For Micro Financing (Conventional), the early repayments are subjected to a 2% early repayment fee on the remaining principal amount to partially compensate our investors on the loss of their residual interest.

Is this product Shariah-compliant?

Micro Financing-i (Islamic) is Shariah compliant.

What makes a business eligible for Micro Financing-i (Islamic)?

You may not be eligible for Micro Financing-i (Islamic) if your core business involves the trading of:

  1. alcohol;

  2. gambling;

  3. pornography;

  4. tobacco and dangerous drugs;

  5. entertainment-related companies – such as karaoke lounges serving alcohol, film production houses producing mainly illicit movies, cinemas that typically screen entertainment-related movies;

  6. pork and its by-products;

  7. food items that are prohibited under the teaching of Islam such as frogs, snakes, crocodiles;

  8. shariah non-compliant massage parlours that allow treatment from the opposite gender;

  9. prostitution;

  10. interest-based lending, including credit sales with interest charges;

  11. conventional insurance and unit trust agencies; and/or

  12. production and distribution of idols, statues, and materials and places for worshipping other than Allah

What is the difference between Islamic and Conventional Financing?

The main difference between Islamic and conventional financing lies in the principles they follow:

  1. Islamic financing is based on Shariah principles, which avoids interest-based transactions and focuses on sale and purchase contract. It rules out businesses which are not permissible under the Shariah principles such as alcohol, pork and its by-products, tobacco etc.

  2. Conventional financing, on the other hand, does not follow these principles.

For example, in our Micro Financing product, both conventional and Islamic options are available based on the business activities and needs of the SMEs. The return rate, principal financing amount, and financing payment tenure may be the same for both. However, the underlying contract, the charges and compensation for delayed payments differ.

For more detailed information, you can visit our website.

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