When it comes to financing, there are two main options available: grants and loans. Though they may offer financial help, they have some distinct features from one another.
Content Outline
Grants
The grant is a form of non-refundable financial aid. This is issued by governments or other bodies to persons or corporations for a particular public purpose. Grants are different from loans, where one needs to repay the loans after the maturity period has ended.
There are various grants in Malaysia people can find use of. The Dana Impak constitutes one such grant which was introduced by Khazanah Nasional Berhad to enhance Malaysian economy competitiveness and build national resilience, and additionally providing socio-economic benefits and impact on the people. The Dana Impak is one of the main pillars in the Advancing Malaysia strategy and has an allocation of RM6 billion over the next five years for six main themes: Building Climate Resilience, Quality Health and Education for All, Food Security and Energy, Digital Society and Technology, Competing in the Global Market. Further, the fund has a SEMARAK framework to evaluate the social and environmental contribution of their investment.
Loans
Loan is a kind of financial aid, which should be repaid together with interest, at the expiry date of the funding period. Banks or other financial institutions provide loans to persons or entities for a particular cause, either personal or business. There are secured and unsecured loans with different interest rates.
There are some different types of loans in Malaysia for people and businesses. For instance, the targeted loan repayment assistance program for COVID-19 impacted individuals and small businesses or SMEs such as TRA – Targeted Loan Repayment Assistance.
Comparison
The table below summarizes the differences between grants and loans:
| Basis for Comparison | Grants | Loans |
|---|---|---|
| Meaning | Financial aid awarded by the government for a specific purpose | Financial assistance provided by banks or financial institutions to the borrower, which is repayable after some time with interest |
| Repayment | Not required | Must be repaid during the specified term or after maturity |
| Interest | No interest applies | Interest rate varies, depending upon the type of interest |
| Source | Limited | Many |
| Availability | Grants are not awarded easily to any person or entity | Comparatively, the availability is easy |
| Form | Cash and kind | Cash only |
| Purpose | Specified or authorized purpose | Any personal or commercial purpose |
| Refund | Grants need to be refunded, if necessary conditions are not met | No such refund |
Exploring Available Grants and Loans for Your Venture
Exploring the available grants and loans can significantly fuel your endeavors. Here are notable grants:
| Name | Type | Claimable expenses |
|---|---|---|
| eTrade | Grant | maximum RM25,000 |
| Market Development Grant | Grant | maximum RM300,000 |
| Greater KL Live Lab | Grant | maximum RM70,000 |
| Young Agroprenuer Grant (GAM) | Grant | Grant |
| CIP SPARK | Conditional grant | up to RM150,000 |
| CIP SPRINT | Conditional grant | up to RM600,000 |
| Change Upgrade Product (CUP) | Matching grant | maximum RM60,000 |
| Service Export Fund (SEF) | Grant/ Matching Grant | up to RM1.3 million |
| Gamelan 2022 | Matching Grant | up to RM200,000 |
| National Technology & Innovation Sandbox Fund | Grant/ Matching Grant | maximum RM4 million |
| Industry 4ward | Matching Grant | maximum RM500,000 |
| High Impact Product (HIP) | Matching Grant | maximum RM200,000 |
| Change Upgrade Product | Matching Grant | maximum RM60,000 |
| Semarak Niaga – Low Carbon Transition Facility | Matching grant/loan | up to RM10 million |
| Business Accelerator Programme (BAP 4.0) | Matching Grant | maximum RM400,000 |
| Malaysia Grand Challenge | Matching Grant | maximum RM15 million |
| SME LOAN | Soft Loan | maximum RM500,000 |
| SME Automation And Digitalisation Facility (ADF) | Loan | maximum RM3 million |
| Micro Credit Scheme | Loan | maximum RM500,000 |
| Business Accelerator Program (BAP) Soft Loan | Soft Loan | maximum RM1 million |
| Halal Technology Development Fund | Loan | maximum RM4 million |
| Business Growth Fund | Loan | maximum RM10 million |
| Business Start-up Fund | Loan | maximum RM5 million |
| KONTRAK-I Financing Scheme | Loan | maximum RM100,000 |
| TEMANNITA Financing Scheme | Loan | maximum RM10,000 |
| Rural Economy Funding Scheme (SPED) | Loan | maximum RM200,000 |
| Special Business Financing Scheme for Women (DanaNITA) | Loan | maximum RM150,000 |
| Industry Value Chain Development Programme – (PRiN) | Loan | maximum RM1 million |
| Express Contract Financing Scheme (SPiKE)/SPiKE GLC | Loan | maximum RM1 million |
| Financing Scheme for Persons with Disabilities (OKU) | Loan | maximum RM50,000 |
| Financing Scheme for IPMA Graduates (SEMAi) | Loan | maximum RM50,000 |
| Technology Entrepreneur Financing Scheme (SPiM Tekno) | Loan | maximum RM500,000 |
| Kampung Baru Cina Financing (PKBC) | Loan | maximum RM50,000 |
| Low Carbon Transition Facility (LCTF) | Loan | maximum RM10 million |
| All Economic Sector (AES) Facility | Loan | maximum RM5 million |
| Youth / MARA Educational Institution Graduate Entrepreneur Programme (PUTRA) | Loan | maximum RM10,000 |
| BSN Micro/I Semarak | Loan | maximum RM50,000 |
| Disaster Relief Facility (DRF) 2022 | Loan | up to RM700,000 |
| Rural Economy Funding Scheme (SPED) | Loan | up to RM20,000 |
| Soft Financing Scheme for Automation & Modernisation (SFSAM) | Loan | up to RM20 million |
| Business Recapitalisation Facility (BRF) | Loan | up to RM5 million |
| Kampung Baru Cina Financing (PKBC) | Loan | up to RM50,000 |
| i-Tekad Programme | Loan | up to RM50,000 |
| Jumpstart Financing Scheme | Loan | maximum RM500,000 |
| MARA Integrated Smart Auto (MISA) | Loan | maximum RM1 million |
| Indian Community Entrepreneur Development Scheme (SPUMI) | Loan | up to RM100,000 |
| Professional Financing Scheme (ProSPEC) | Loan | up to RM500,000 |
| Micro Enterprises Facility (MEF) | Loan | up to RM50,000 |
| SME Revitalisation Financing (SMERF) | Loan | up to RM250,000 |
| Soft Financing Scheme for SMEs (SFSME) | Loan | up to RM5 million |
| Soft Financing Scheme for Digital & Technology (SFDT) | Loan | up to RM1 million |
| PEMULIH Government Guarantee Scheme (PGGS – SJPP) | Loan | up to RM50 million |
| Business In Transformation (PERNAS) | Loan | up to RM500k (Pre-Franchisor) and up to RM25k (Pre- Franchisee) |
| Mobile Business Financing Scheme (Mobile Business/Karavan) | Loan | maximum RM500,000 |
| Technical Entrepreneur Development Program (PUTEK) | Loan | maximum RM500,000 |
| MARA Entrepreneur Guarantee Scheme (SJUM) | Loan | maximum RM2 million |
| Malaysian Chinese Women Entrepreneur Foundation | Loan | maximum RM30,000 |
Navigating Funding: Your Roadmap to Success
There are different forms of financial assistance that people and companies may use to meet their goals such as grants and loans. Grants, on the other hand, are offered interest free with no need for repayment while loans accrue interest after the loan term elapses. In Malaysia, there are some grants or loans that are available depending on the type of individuals and business.
While seeking financial help, you need to know the differences between grants and loans, and choose what option is the best one in your case.
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