Start-up businesses were badly hit by the tough economic environment last year, as evidenced from the sharp increase seen in Credit Guarantee Corp Bhd's (CGC) bad debt provisions.
CGC provides credit support to small- and medium-sized enterprises (SMEs), by acting as a third-party guarantee for the businesses, particularly start-ups that cannot provide enough collateral when taking out bank loans.
CGC's provisions for non-performing loans (NPLs) shot up 150 per cent last year to RM180.6 million (US$47.6m), from RM72 million (US$19m) in 2002, its annual report showed yesterday. The agency went into the red, posting a net loss of RM4.7 million (US$1.2m)in 2003, a long drop from the RM111.8 million (US$29.5m) net profit announced a year before.
The agency's revenue is generated by the guarantee fees and interest income. Its managing director Datuk Wan Azhar Wan Ahmad said the non-performing trend became more apparent towards the end of the year.
