Introduction

Government have the role to ensuring the entrprenuerial industry moving forward and able to
compete in local and international. Government of Malaysia encourages the participation of the
society in the economical development of the country. It has established a solid support structure
to assist entreprenuers in setting up company as well as in financing, managing, and growing the
business.
Sources of Capital
New businesses must be capitalized carefully. Entrepreneurs must identify their start-up
capital needs and their cash flow through their break-even point. The total of the two,
plus a healthy just in case reserve, add to the total amount needed to open the doors of
a new firm. Never sell short the amount of money it takes just to get started! It is certain
to be a lot more than you expect at first.

1. KINDS OF MONEY
When you plan the capital requirements of your new firm, you can consider two
forms of money.

a. Equity is ownership in the business. It can come from you, or from someone
else. Since it is ownership, it implies a degree of risk, and an element of control
over the conduct of the business. If you sell an equity share to someone else,
they could lose their money if the business doesnt work out. And, it is likely that
they will want to have some say in the way the business is run. If you arent
willing to give up some control, then a co-owner (sometimes called a silent
partner) may not be for you. Its amazing how people seem to change after they
have given you some of their money.






b. Debt is a loan you take out. As such, it must be repaid. There are many sources
of borrowed money, but remember that in every case, you must pay it back
according to mutually agreed upon terms. Moreover, loans usually involve
interest a charge you pay for the rental use of the money.
Be aware at the beginning that the majority of your original start-up capital will
probably have to be equity, simply because most lenders dont want to assume
the risk involved with a new, untried, unproven business venture. The statistics
are grim:

Most new businesses dont make it - estimates are as high as 75% in the
first year.

Lenders are not usually good risk-takers; they like security usually
require 25-35% collateral for new businesses.

Most of your money will be equity; some (if any) might be debt. Know up front,
however, that there is almost no way you will be able to finance your entire
venture without debt. (Unless you have a favorite rich relative with excess money
they want to give you.)












2. SOURCES OF START-UP CAPITAL
With that in mind, here is a list of sources you might consider for your start-up
money.

a. Individuals
Yourself
Savings
Home Equity (Mortgage)
Life Insurance cash value
Sell or mortgage other personal assets (boat, motor home vacation
house)

b. Other Individuals
Relatives
Friends
Other local Investors
Intense competition for funds
Risk vs. Return
Basic Conservatism (fear of loss)
Ownership = control











3. SOURCES OF BORROWED CAPITAL (Debt from short-term to long-term)

a. Trade Credit Borrow from your suppliers for your inventory needs. 30 120
days possible. Be sure to pay on time or early.

b. Equipment Leasing Low down payment, fixed monthly payments; deductible
expense.

c. Equipment Loans Borrow, using the equipment as collateral (just like your
car).

d. Banks For a single sum
Very conservative! Risk averse. They want a two-to three-year success
track record.
They will require collateral and personal guarantees in addition to
business ones.
They will advance only a small part of the total business needs.
They may require a solid co-signer who will also become liable to repay.
They will demand full details of the business and your personal
finances.
In sum, banks are not in the business of making start-up capital loans.
BUT: Consider Franchising many have good relationships with
lenders.








Government Loan

In finance, a loan is a debt provided by one entity (organization or individual) to another entity at
an interest rate, and evidenced by a note which specifies, among other things, the principal
amount, interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s)
for a period of time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the principal,
from the lender, and is obligated to pay back or repay an equal amount of money to the lender at
a later time.

The loan is generally provided at a cost, referred to as interest on the debt, which provides an
incentive for the lender to engage in the loan. In a legal loan, each of these obligations and
restrictions is enforced by contract, which can also place the borrower under additional
restrictions known as loan covenants. Although this article focuses on monetary loans, in
practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other
institutions, issuing of debt contracts such as bonds is a typical source of funding.

Government Agencies :
a. SME corp. Malaysia
b. Malaysian Technology Development Corporation ( MTDC )
c. Perbadanan Nasional Berhad (PNB)
d. Malaysian Industrial Development Authority (MIDA)
e. Majlis Amanah Rakyat(MARA)



Business Support System
Business support system is intended to give a support in financial and technical services by
government and other agencies. An entrepreneur usually have a problem in having an assistance
in finance. With the knowledge in business support system, entrepreneur will be able to carry out
his business smoothly and make informed decisions when faced with any uncertainties in his
new venture.
1. Financial support
a. MARA
Provides assistance in the form of loans and equipment to SME entrepreneurs.
b. Commercial banks
Provide loans that are allocated by the Central Bank of Malaysia (BNM) to be
distributed to qualified applicants.
c. BPIMB
Gives financial credit to industrial businesses.
d. MIDF
Provides fixed asset financing to manufactures in Malaysia.
e. BPM
Gives financial assistance and equipment to agriculture-related industries.

2. Entrepreneur and Management Training
a. MARA
Provides training and guidance.
b. MEDEC
Plans and implements entrepreneurship development programmes.
c. SEDC
Provide and promote commercial.
d. NPC
Provides training in enhancing quality and productivity.


3. Technical and technological support
a. PORIM
Develops quality products using latest technology.
b. FRIM
Promote sustainable management and the optimal use of forest resources.
c. MIMOS
Promotes innovation in information technology.

4. Infrastructure support ( location and premise )
a. UDA
Provides and carries out projects at urban settlements.
b. MARA
Provides business sites to carry out business activities.
c. SEDC
Develops basic utilities and areas like pathway and recreational facilities.

5. Marketing support
a. FAMA
Markets agricultural products locally and abroad.
b. MATRADE
Exposes the entrepreneur to available business oppurtunities.
c. MITI
Affairs related to foreign trade








6. Research and project recognition
a. MARDI
Research on the output of agricultural products.
b. RRIM
Research on the quality of rubber and produces new rubber-based products.
c. MPOB
Research on products produced from the output of palm oil.
d. SIRIM berhad
Discovering and developing new technologies

7. Informational support
a. FRIM
Provides researchand development.
b. MIDA
Provides information on business oppurtunities
c. MATRADE
Organize training programmes
d. SIRIM
Ensures the quality of local products

8. Extension and advisory services
a. MARA
Apprenticeship training scheme, technical entrepreneurs programmes.
b. MPOB
Technical advisory services.
c. FAMA
Enchancement of product image and presentation.
d. DOA
Follow-up on entrepreneurial training and development programme.


Incentives in entrepreneurial activities
1. Pioneer status
2. Quota
3. Embargo
4. Tariff/import duty
5. Export encouragement
Financing facilities
1. Supplier trade credit
2. Overdraft
3. Term loan
4. Hire purchase
5. Leasing
6. Factoring
7. Government loan