SME financing for stock and inventory
Busy seasons, bulk discounts and big orders all need stock bought upfront. An SME business loan gives you working capital to restock now and repay in equal monthly instalments as sales come in. It's for businesses registered with SSM for at least 1 year. This guide shows how to size the loan from your sales records and test it against a slow season.
About RM 4,278.08 a month at 4.90% p.a.
A retail shop owner stocking up ahead of the year-end sales season, putting in RM 10,000 of the business's own cash and borrowing the rest.
Apply nowWorked out at 4.9% p.a., the same rate for every period. Every approved customer pays 4.9% p.a., and your adviser confirms your amount and instalment before you sign.What it can cover
- Seasonal stock for festive periods like Chinese New Year, Hari Raya, Deepavali or year-end sales
- Bulk purchases to get a better supplier price or an early payment discount
- Raw materials and packaging for production
- Stock for a large customer order or a new product line
- Freight, import duties and storage tied to a stock purchase
- Paying suppliers on time while your customers pay you on credit terms
How much to borrow
Work from last season's sales, not from shelf space
Look at your sales records for the same season last year: what sold, how fast, and what was left over. Estimate the stock you can realistically sell, at cost price, then subtract the cash the business can put in. In the example on this page, RM 60,000 of stock at cost minus RM 10,000 of the business's own cash leaves RM 50,000 to borrow.
Map your cash cycle
Count the days from paying your supplier to having the customer's cash in the bank: days the stock sits on the shelf, plus the credit days you give customers, minus the credit days your supplier gives you. If customers pay you on 60-day terms, the cash from a December season may not arrive until February. Your first instalments need to be covered by other income until it does.
Pick the shortest term your cash flow allows
At our rate of 4.9% p.a., RM 50,000 costs about RM 717.02 in interest over 6 months, RM 1,337.00 over 12 months and RM 2,591.97 over 24 months. Stock that sells within one season rarely needs a long term. If sales come in faster than planned, you can settle early with no penalty.
Stress-test for a slow season
Ask: if sales came in a third lower than planned, could the business still pay the instalment from its other income? Keep enough cash to cover at least a couple of instalments, plus rent and payroll. If the answer is no, buy and borrow less, or stage your orders.
What you'll usually need
- The owner's or director's MyKad, verified at signing
- SSM registration: the business information for a sole proprietorship or partnership, or the company profile for a Sdn Bhd
- Last 6 months' business bank statements
- Optional: your latest Borang B (sole proprietors) or financial statements (Sdn Bhd)
- Optional: the tenancy agreement for your shop, office or warehouse
- For your own planning: supplier quotations, purchase orders or customer orders
Before you borrow
Some suppliers offer 30 to 60 days' credit, or a discount for early payment. Free supplier credit is cheaper than a loan. A 2% discount for paying upfront, on the other hand, can be worth more than the interest on a short loan. Work out both before you decide.
Food, cosmetics with expiry dates and fashion or seasonal items lose value quickly if they don't sell. Buy and borrow more conservatively for them, and plan how you'll clear leftovers.
Depending on your business, supplier financing, bank trade facilities or government-backed financing may cost less, though it can take longer to arrange. For example, TEKUN Nasional offers financing schemes for Bumiputera entrepreneurs, and SME Bank offers financing for micro, small and medium businesses; check their websites for current schemes and eligibility. Our loan suits businesses that want a simple unsecured amount quickly arranged.
Run sales and stock purchases through the business account. Clean statements make your income easier to assess now, and your next application simpler.
If the season goes well, make a partial prepayment or settle in full. There's no penalty, and you only pay interest up to the day you settle.
Questions
Is this for buying stock as in shares?
No. Here stock means inventory: the goods and materials your business sells or uses. Loans are not for trading shares or crypto.
Can a sole proprietor apply?
Yes. Sole proprietors and partnerships registered with SSM for at least 1 year can apply, as well as Sdn Bhd companies. If you don't have a separate business account, the owner's bank statements can show the business income.
My business has been registered for less than a year. Can I apply?
Not for the SME Business Loan, which needs at least 1 year of SSM registration. If you have a steady personal income, you may be able to apply for a Personal Loan in your own name instead; your adviser can talk through whether that suits you.
Will the money be paid to my supplier?
No. The loan is paid into the bank account named in your agreement, and you pay your suppliers yourself. Keep supplier invoices and receipts together with your loan papers.
Can I repay as my stock sells rather than monthly?
Repayment is in equal monthly instalments. When sales come in, you can make a partial prepayment of at least RM 1,000, which lowers your remaining instalments, or settle in full, at any time with no penalty. Both reduce the interest you pay.
Related guides
Other purposes
- Renovation loanPay your contractor and furnish your home, then spread the cost over monthly instalments.Read the guide
- Education loanCourse fees, professional certifications or your child's tuition, repaid monthly.Read the guide
- Medical loanTreatment, procedures or dental work not covered by insurance, repaid monthly.Read the guide
- Equipment financingMachinery, kitchen equipment or a POS system, paid off over 6 to 108 months.Read the guide
- Emergency cash loanAn urgent bill before payday. Borrow for days, not years, and repay in one go.Read the guide
Apply in about 3 minutes
Work out your monthly repayment first with our calculator. Your adviser confirms your rate before you sign, and applying doesn't commit you to borrow.