SJPP: Strengthening Access to Financing for SMEs Through Government Guarantees

When banks say no, Malaysia’s entrepreneurs need someone bold enough to say yes. Many small and medium enterprises (SMEs) possess promising ideas but lack sufficient collateral or track records to secure financing, as banks are cautious about taking on the credit risk.

That’s where Syarikat Jaminan Pembiayaan Perniagaan (SJPP) Bhd, a company wholly owned by the Ministry of Finance Incorporated (MOF Inc.) steps in, unlocking almost RM100 billion in SME financing by guaranteeing up to 80% of the risks banks are unwilling to bear. This is a testament to the scheme’s impact.

Acting on behalf of the Government of Malaysia, SJPP manages and administers various government guarantee schemes. It bridges the financing gap by sharing the credit risks banks face when lending to SMEs. Basically, to assist SMEs with insufficient collateral or no collateral to gain access to financing facilities from participating financial institutions (FIs). 

SJPP doesn’t lend funds directly. Instead, it gives banks the confidence with a ‘yes’ and additional comfort to give financing by providing additional assurance through guaranteeing part of the risk.

This simple mechanism has facilitated billions in financing since 2009, benefiting more than 100,000 SMEs; driving business growth, job creation, and supporting Malaysia closer to a high-income economy. 

So, how does it work? It’s actually pretty straightforward. Apply for a business loan at any bank that works with SJPP. The bank checks if the usual requirements are met and if the business fits under the scheme, that’s when things get moving. SJPP comes in to guarantee a big chunk of the loan, giving the bank the extra confidence it needs to approve the financing.

During the Budget 2025 launch in February, Datuk Seri Amir Hamzah the Minister of Finance II highlighted that the government has allocatedRM20 billion in guarantees through SJPP for SME financing, particularly in the halal, high technology, environmental, social and governance, and tourism sectors. Of the amount, RM5 billion is specifically set aside for Bumiputera businesses to ensure fairer and more equitable growth opportunities.

This model aligns with global practices in countries like Germany, South Korea, and Japan, where government guarantees underpin SME financing and supporting business growth. In Malaysia, SJPP plays this role, working in partnership with the Financial Institutions (FIs) and regulated by Bank Negara Malaysia with oversight of the Ministry of Finance (MOF) to foster a thriving SME ecosystem.

This need became clearer as a result of the collective impact arising from the recent US 19% tariffs on Malaysian imports, expansion of SST, electricity tariff hike, and impending RON95 rationalisation as well as foreign worker levies and wage increases on businesses.

With SJPP guarantee, Malaysia’s SMEs continue to thrive, proving that behind every successful business there is support from the Government via various government guarantee schemes. 

If short on collateral but with a strong business, ask a preferred banker this simple question: “Can my loan be guaranteed by SJPP?”. For more information, you may visit SJPP’s website at www.sjpp.com.my.

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