Friday, July 30, 2010
EVERY year, the SMI Association of Malaysia receives complaints from its members about the difficulties of securing credit.
President Chua Tiam Wee says while companies with good track records do not face a major issue in this area, start-up companies and those with less-than-rosy track records continue to have doors shut on them.
Wee suggests two solutions. The first is his call on banks to evaluate the applications of small and medium enterprises (SMEs) carefully and to try to understand the nature of their business and industry.
The second is a call to empower SME Bank to collect deposits, along the lines of a commercial bank.
“This may then help the bank to increase lending to SMEs,” he says.
Chua says SME Bank currently relies on Government funding and its paid-up capital of about RM1.35bil is very small.
How does a bank rate the credit worthiness of an application?
AmBank (M) Bhd retail banking managing director Datuk Mohamed Azmi Mahmood says banks would generally assess five credit factors of an applicant.
These are character, capacity, capital, condition and collateral.
Azmi says character refers to the borrowers’ “willingness” to repay while capacity refers to their ability to generate adequate cashflow to repay the loan.
The remaining three factors – capital, condition and collateral – can be mitigated or compensated by the favourable economic climate and government-guaranteed schemes such as those under Credit Guarantee Corp (M) Bhd (CGC) and Syarikat Jaminan Pembiayaan Perniagaan Bhd, he says.
Azmi says borrowers must show good character, management competency and ability to repay existing loan obligations and other creditors.
“The lack of credit history for those applying for bank loans for the first time can be mitigated and compensated by relevant supporting documents such as updated financial accounts, bank statements and letter of award,” he says.
He says it is important that SMEs maintain proper book keeping to ensure that these documents are available when required, especially their audited financial accounts. “Loan applications from sectors or industries that the Government is promoting will also have a better chance of having their applications approved,” Azmi says.
He says SME loans make up a fourth of AmBank’s loan portfolio to corporates and enterprises last year.
Hong Leong Bank Bhd group managing director Yvonne Chia says loan applications that show good repayment capacity, acceptable business risks and account performance track records will be considered favourably.
She says financial assistance to SMEs comprised 40% of Hong Leong Bank’s business banking portfolio as at March 2010.
Meanwhile, HSBC Bank Malaysia Bhd deputy managing director (commercial banking and director sales) Thomas Varughese says one of the main reasons to reject an application is the lack of financial information that can show the sustainability or viability of a business.
For instance, he says, many SMEs do not pay enough attention to managing their financial position to portray a picture of success, or to show evidence of business continuity.
This makes it difficult to approve the application, Varughese says.
“Poor credit history of the SMEs, including that of its directors and/or guarantors is another issue,” he says.
Varughese says if the SMEs or their associated directors or guarantors have exhibited poor credit history, which is shown in missing payments on their existing loans including personal loans and credit cards, this will give a negative impression on the overall credit assessment.
To secure a loan, he says, SMEs should have a detailed business plan that explains why the loan is needed in the first place.
“It will also be helpful to provide information about the business (company or management profile), nature of the business and financial statements or accounts for at least the last two to three years,” he says.
Varughese says the provision of well-thought-through cashflow statements can also provide further evidence for the need for the financial assistance, adding that SMEs may visit HSBC website for guidance on how to apply for loans.
He says that as of last year, more than 22% of HSBC’s loan portfolio is SMEs loans.
Varughese says the bank is not keen to finance businesses that may be considered as unsustainable or destructive to the environment.
“At HSBC, we believe that being a sustainable business is not only about delivering profitable long-term growth, but also about maintaining a stable environment and building healthy, educated communities,” he says.
Tuesday, July 13, 2010
Eker lists seventeen ways in which the financial blueprints of the rich differ from those of the poor and the middle-class.
- Rich people believe: “I create my life.” Poor people believe: “Life happens to me.” (This is HUGE. Every successful person I know is control of her life. Unhappy people are constantly complaining to me how this, that, or the other thing prevents them from doing something.)
- Rich people play the money game to win. Poor people play the money game to not lose.
- Rich people are committed to being rich. Poor people want to be rich.
- Rich people think big. Poor people think small.
- Rich people focus on opportunities. Poor people focus on obstacles.
- Rich people admire other rich and successful people. Poor people resent rich and successful people. (This is important, too — it seems to hold true among my friends.)
- Rich people associate with positive, successful people. Poor people associate with negative or unsuccessful people. (Another important one.)
- Rich people are willing to promote themselves and their value. Poor people think negatively about selling and promotion.
- Rich people are bigger than their problems. Poor people are smaller than their problems.
- Rich people are excellent receivers. Poor people are poor receivers.
- Rich people choose to get paid based on results. Poor people choose to get paid based on time.
- Rich people think “both”. Poor people think “either/or”.
- Rich people focus on their net worth. Poor people focus on their working income.
- Rich people manage their money well. Poor people mismanage their money well.
- Rich people have their money work hard for them. Poor people work hard for their money.
- Rich people act in spite of fear. Poor people let fear stop them. (This is big for me right now. I’ve accomplished most of the goals I set for myself, and need to set some new ones. But I have this nagging fear, because I’m moving into the unknown. Eker says that successful people act in spite of this fear. They move beyond worry, they “fake it til they make it”, learning as they go. Unsuccessful people do nothing at all.)
- Rich people constantly learn and grow. Poor people think they already know.
Monday, July 5, 2010
In financial planning, the most important thing that you need to do is to set financial goals. Your goals could be controlling your spending so that you could pay off your study loan or buy a home/car. Regardless of what your goal is, ensure that it is SMART i.e. specific, measurable, realistic and can be achieved within a certain time frame. So learning to identify and set clear goals is key to your success in life.
Your specific goals will depend on a number of factors-your values, age, financial situation, and interests.
What is SMART goal?
10 Super Saver Tips for a Financially Stress-Free Campus Life
It’s not easy, and it’s definitely not cheap to be a student nowadays. Other than studying and completing assignments, good students also need to be able to manage their money smartly. Failure to practise good money management in campus may even disrupt your studies.
Fortunately, good money management for campus students can be easily kick-started by practising simple money-saving techniques. Securities Industry Development Corporation (SIDC), the training and development arm of Securities Commission Malaysia, would like to share with you 10 basic “Super Saver” tips that will help you achieve a pleasant and financially stress-free campus life! Upon reading this article, you should be able to apply these handy tips and change your own financial habits on campus.
Super Saver 1: Practise the 10% Rule. The 10% Rule essentially means saving 10% of whatever money you have every month. So, every time you receive your PTPTN loan, MARA loan, scholarship or even allowance from your parents, make sure that you save at least 10% of it. This practice will also help you to be financially consistent and disciplined in future.
Super Saver 2: Establish an Emergency Fund. Sometimes, emergencies in the form of unexpected incidents MAY require you to spend significant amounts of money. For example, your vehicle could break down, you may get sick and need to be hospitalised, your PC or laptop could malfunction and require expensive repairs, or you could encounter other money-related issues. That’s why it’s good to establish an emergency fund. This way, if you ever need to spend money suddenly or on short notice, you would not have to worry about where to get the money from. However, always remember: An emergency fund should be used for EMERGENCIES ONLY!
Super Saver 3: Cultivate a habit of investing. You should start as soon as you can in order to obtain more returns from investments. Take advantage of compounding interest by saving your money in suitable investment products. Do your homework first by reading prospectuses, financial and annual reports, business magazines and more. By establishing some familiarity with the concept of investing, you can then pick and invest in the product that best suits your risk appetite, financial goals and budget.
Super Saver 4: Price-check when you shop. By comparing prices and searching for bargains, you’ll be able to save money whenever you go shopping. Price-checking also teaches you to adopt a more careful and patient approach when shopping. The best part about being a patient and careful shopper is that you will not succumb to impulse purchases and you will always strive to obtain the best value for your hard-earned money!
Super Saver 5: Cut up the credit card. A study conducted by the Department of Statistics Malaysia regarding bankruptcy caused by credit card debt among Malaysians showed that 50% of them are under the age of 30 years old. In other words, college students and young working adults make up 50% of Malaysians who are declared bankrupt. Whether you own a credit card or your parents “gifted” a supplementary one to you, always ask yourself: “Is having a credit card really necessary?” Remember, be responsible when using a credit card, either as a primary or supplementary holder because somebody (either you or your parents) will have to pay the bill!
Super Saver 6: Reduce your bills. Keeping the fan in your apartment or hostel to a medium speed, switching to fluorescent, energy-saving light bulbs, unplugging electrical appliances that are not frequently used, and reducing the screen brightness level on your computer can help you save money on your electricity bills.
Super Saver 7: Be a smart student. Print your work on both sides of the paper, buy refills for your printer cartridge instead of buying new cartridges, borrow reference books from your seniors/friends/the library, stay with housemate(s) instead of staying alone, and eat on campus more. Generally, the services and facilities provided to you on campus such as food, accommodation, photocopying services, etc tend to be cheaper than elsewhere, so take full advantage of them! Better yet, get your campus mates together and look out for opportunities for group discounts on campus such as buying reference books or stationeries in bulk.
Super Saver 8: Take advantage of student privileges. A student card is one of the most powerful tools you can use to save money. Use it to get discounts at the cinema, bookstores, when taking the LRT, signing up for internet access, holidays, eating out, sports, entertainment and more.
Super Saver 9: Use public transport. By taking public transportation instead of driving, you will spend less money on petrol. Not a fan of public transport? Get your friends together and carpool! You might also want to consider getting a motorcycle or bicycle to save on petrol money. Always plan your journey, and remember to travel only when necessary. For example, if the place you’re going to is very near and the weather is good, why don’t you take a walk to your destination instead of driving?
Super Saver 10: Use the Internet to make calls. Instead of spending so much money on prepaid calls and top-up cards, how about making your calls on the Internet instead? Not only can you chat for hours, it also doesn’t cost you a cent (assuming you go to free wi-fi hotspots). If you absolutely must use that handphone, remember that it’s cheaper to SMS instead of call.
In conclusion, college or university is supposed to be about more than just studying. You should also be using your time in campus to discover new opportunities, experience new things and meet new friends. With so many responsibilities to handle, the last thing you want is to suffer financial difficulties because you didn’t manage your money properly and sensibly. By practising the ‘10 Super Saver Tips’ we have shared above, you should be able to enjoy a financially stress-free, fun and exciting campus life!