The Federation of Malaysian Manufacturers (FMM) has proposed that banks should offer alternative forms of collateral for small- and medium-sized enterprises (SMEs), which could include one or a combination of the following:
Confirmed sales proceeds;
Factoring, allowing SMEs to factor invoices at identified financial windows;
Guarantees from purchasers;
Second charge on property or assets;
Feasibility studies by pre-agreed consultants or special unit; and
Guarantees from directors or holding companies.
It suggested that as an incentive to financial institutions providing loans with alternative collateral, interest income from such loans shouldbe exempt from tax.
