ISLAMIC FINANCING FOR SMALL MEDIUM ENTERPRISES IN MALAYSIA: A PROPOSED FRAMEWORK

Abstract

Small Medium Enterprises (SMEs) is an essential sector contributing to the economic growth in Malaysia. Government agencies established a comprehensive plan for SMEs especially to provide funds to all SMEs form start-up firms to large corporations. The growth of SMEs is in line with the growth of Islamic finance and Muslim entrepreneurs’ need to determine the best sharia-compliant financing for their business. However, some of them are unaware with regards to the eligibility and the procedure to apply for the financing. Most unsuccessful applicants lack a robust business plan as well as has a bad financial record that is a basic problem in their application. Therefore, this study proposed a framework for SMEs in application for Islamic financing at Islamic banks to enhance SMEs understanding and heightened awareness on what should be done for pre and post-application in financing application.