SME Loan Interest Rate Malaysia 2026: Complete Comparison
The cheapest SME loan in Malaysia is MARA at 3.5% p.a. (Bumiputera only), followed by CapBay BERKAT at 3% (Chinese only, max RM30K). For the general market, TEKUN at 4% flat (~7.2% effective) and Maybank from 4.5% flat (~8.5% effective) are the most competitive. But headline rates are misleading — what matters is the effective interest rate (EIR) and your total cost of borrowing.
This guide compares every SME financing rate in Malaysia, explains the critical difference between flat and effective rates, and shows you the actual cost in ringgit.
Disclaimer: Interest rates, loan amounts, and eligibility requirements shown are indicative and subject to change. Contact the respective bank or institution directly for the latest rates and terms. Last reviewed: January 2026.
Current Interest Rate Environment (February 2026)
| Indicator | Rate | Last Changed |
|---|---|---|
| OPR (Overnight Policy Rate) | 2.75% | July 2025 (cut from 3.00%) |
| 2026 outlook | Hold at 2.75% (consensus) | BNM, BMI/Fitch, Kenanga |
| Inflation | ~1.8% (forecast) | Contained, no pressure |
BNM cut the OPR by 25 basis points in July 2025 to stimulate growth. Analysts expect the rate to hold at 2.75% throughout 2026 — meaning SME loan rates are unlikely to change significantly this year.
What OPR means for your SME loan: Bank lending rates are tied to BLR/BFR/BR, which move with OPR. The July 2025 cut lowered all bank reference rates by 0.25%, reducing your effective borrowing cost. If you took a loan before July 2025, your variable-rate payments should have already decreased.
Bank Reference Rates (February 2026)
SME loans are priced as BLR/BFR + spread. Here are the current reference rates:
| Bank | BLR/BFR | BR | SBR |
|---|---|---|---|
| Maybank | 6.40% | 2.75% | 2.75% |
| CIMB | 6.40% | 2.75% | 2.75% |
| Public Bank | 6.41% | 2.75% | 2.75% |
| RHB | 6.40% | 3.50% | 2.75% |
| Hong Leong | 6.38% | 2.72% | 2.75% |
| AmBank | 6.35% | 2.75% | 2.75% |
| Alliance | 6.40% | 2.75% | 2.75% |
| Affin | 6.40% | 2.78% | 2.75% |
| OCBC | 6.51% | 3.58% | 2.75% |
| UOB | 6.40% | 2.75% | 2.75% |
| Bank Islam | 6.47% (BFR) | 3.52% | 2.75% |
| Bank Muamalat | 6.40% (BFR) | 2.75% | 2.75% |
| HSBC | 6.36% | 2.75% | 2.75% |
Note: SBR (Standardised Base Rate) at 2.75% is used for retail loans to individuals. SME/business loans still use BLR/BFR or BR + spread. SBR does not apply to business lending.
Complete SME Interest Rate Comparison
Government Schemes (Cheapest)
| Scheme | Headline Rate | Rate Type | EIR Equivalent | Max Amount | Collateral |
|---|---|---|---|---|---|
| CapBay BERKAT | 3.0% p.a. | Reducing | ~3.0% | RM30,000 | None |
| MARA | 3.5% p.a. | Reducing | ~3.5% | RM500,000 | None/minimal |
| TEKUN Nasional | 4.0% p.a. | Flat | ~7.2% | RM100,000 | None |
| BSN Mikro MADANI | ~4.0% p.a. | Reducing | ~4.0% | RM100,000 | None |
| BNM Skim Mikro | Varies | Varies | 4-8% | RM50,000 | None |
| Alliance AZAM | 0% | Zakat-funded | 0% | Varies | None |
Commercial Banks (Larger Amounts)
| Bank | Advertised Rate | Rate Type | Typical EIR | Max Amount | Collateral |
|---|---|---|---|---|---|
| Maybank | 4.5%–8.0% | Flat | 8.5%–15.2% | RM5,000,000 | Optional (clean up to RM1.5M) |
| Public Bank | 4.8%–8.5% | Flat | 9.1%–16.2% | RM5,000,000 | Varies |
| CIMB | 5.0%–9.0% | Flat | 9.5%–17.1% | RM5,000,000 | Optional (clean up to RM5M) |
| Hong Leong | 5.2%–9.5% | Flat | 9.9%–18.1% | RM3,000,000 | Varies |
| RHB | 5.5%–10.0% | Flat | 10.5%–19.0% | RM2,000,000 | Varies |
| Alliance | 5.9%–13.78% | Flat | 10.4%–24.5% | RM1,000,000 | None (clean loan) |
| AmBank | 5.5%–9.0% | Flat/Reducing | 9.5%–17.1% | RM3,000,000 | Varies |
| OCBC | 6.0%–9.0% | Varies | 10%–17% | RM600,000 | None |
| UOB | ~8.0% | Reducing | ~8.0% | RM500,000 | None |
→ Public Bank offers the lowest secured rates (4.2%) but stricter criteria. See our full Public Bank SME guide for rate breakdown, collateral tips, and approval requirements.
→ Hong Leong's SMElite offers up to 90% property financing margin — higher than most banks' 80-85%. See our full Hong Leong Bank SME guide for rates, green financing, and BNM scheme details.
Alternative Financing (Fastest, Most Expensive)
| Provider | Rate | Rate Type | Effective Annual | Max Amount | Speed |
|---|---|---|---|---|---|
| Funding Societies | 0.8–1.5%/month | Monthly | 20–33% | RM2,000,000 | 15 min–2 days |
| CapBay (commercial) | ~1.0%/month | Monthly | ~12% | RM1,000,000 | 5-7 days |
| Licensed moneylender | Up to 18% p.a. | Varies | Up to 18% | Varies | 1-3 days |
GGSM MADANI (via Bank, with Government Guarantee)
| Feature | Rate | Note |
|---|---|---|
| Rate cap | BLR/BFR + 2% max | ~8.4% maximum |
| Typical range | 6.5%–8.5% EIR | Depends on bank & profile |
| Guarantee fee | 1.0% p.a. (SJPP) | Paid upfront |
| Total effective cost | 7.5%–9.5% | Including guarantee fee |
→ Full GGSM Guide | MADANI Calculator
The Most Important Concept: Flat Rate vs Effective Rate
This is the single biggest source of confusion in Malaysian SME financing. Banks quote flat rates because they look lower. The effective rate (EIR) — what you actually pay — is nearly double.
How Flat Rate Works
Flat rate calculates interest on the original loan amount for the entire tenure, even as you pay down the principal.
Example: RM100,000 at 5% flat over 5 years
- Total interest = RM100,000 x 5% x 5 = RM25,000
- Monthly payment = (RM100,000 + RM25,000) / 60 = RM2,083
- You pay interest on RM100,000 even in month 59 when you only owe ~RM1,700
How Effective (Reducing Balance) Rate Works
Reducing balance calculates interest on the remaining principal each month. As you repay, interest shrinks.
Example: RM100,000 at 9.5% EIR over 5 years
- Month 1: Interest on RM100,000 = RM792
- Month 30: Interest on RM55,000 = RM435
- Month 60: Interest on RM2,000 = RM16
- Total interest = RM24,997
- Monthly payment = RM2,083
Same monthly payment, same total cost — but different headline numbers. The 5% flat loan and the 9.5% EIR loan cost you exactly the same amount. Banks prefer quoting 5% because it sounds cheaper than 9.5%.
Quick Conversion Table: Flat to Effective
| Flat Rate | 1 Year EIR | 3 Year EIR | 5 Year EIR | 7 Year EIR |
|---|---|---|---|---|
| 3.0% | ~5.5% | ~5.6% | ~5.7% | ~5.7% |
| 3.5% | ~6.5% | ~6.5% | ~6.6% | ~6.7% |
| 4.0% (TEKUN) | ~7.1% | ~7.2% | ~7.2% | ~7.3% |
| 4.5% | ~8.1% | ~8.2% | ~8.3% | ~8.3% |
| 5.0% (Maybank low) | ~9.0% | ~9.2% | ~9.4% | ~9.5% |
| 5.5% | ~9.9% | ~10.1% | ~10.3% | ~10.4% |
| 6.0% | ~10.8% | ~11.1% | ~11.3% | ~11.5% |
| 7.0% | ~12.6% | ~13.0% | ~13.3% | ~13.5% |
| 8.0% | ~14.4% | ~14.9% | ~15.2% | ~15.5% |
| 10.0% | ~18.0% | ~18.7% | ~19.1% | ~19.5% |
Rule of thumb: Multiply the flat rate by approximately 1.8-1.9 to estimate the EIR for a 5-year loan. This conversion factor increases slightly with longer tenures.
How to Compare Fairly
When comparing SME loans, always convert to the same basis:
| Provider A | Provider B | Which is cheaper? |
|---|---|---|
| Maybank 5% flat | CIMB 9% EIR | CIMB (5% flat ≈ 9.4% EIR) |
| TEKUN 4% flat | BSN 4% reducing | BSN (TEKUN 4% flat ≈ 7.2% EIR) |
| Alliance 5.9% flat | UOB 8% reducing | UOB (Alliance 5.9% ≈ 11.1% EIR) |
| Maybank 4.5% flat | MARA 3.5% reducing | MARA (Maybank ≈ 8.3% EIR) |
What Rate Will YOU Actually Get?
Advertised rates are minimums. Your actual rate depends on five factors:
Factor 1: Business Age
| Years in Business | Typical Rate Impact |
|---|---|
| Under 1 year | +2-3% above minimum (or rejection) |
| 1-2 years | +1-2% above minimum |
| 3-5 years | Standard rate |
| 5+ years | May qualify for below-standard rate |
Factor 2: Annual Revenue
| Revenue | Rate Impact |
|---|---|
| Under RM300K | Higher tier rates, may need government scheme |
| RM300K–RM1M | Standard SME rates |
| RM1M–RM5M | Competitive rates, banks actively compete |
| RM5M+ | Best rates, can negotiate aggressively |
Factor 3: CCRIS Record
| CCRIS Status | Rate Impact |
|---|---|
| All zeros (perfect) | Best rates available |
| Occasional "1" (1-month late) | +0.5-1% premium |
| Any "2" (2-months late) | +1-2% or higher tier |
| Any "3" (3+ months late) | Likely rejection at banks |
Factor 4: Collateral
| Security | Rate Impact |
|---|---|
| Property collateral | -1-2% (cheapest rates) |
| Fixed deposit pledge | -0.5-1% |
| Clean/unsecured | Standard to premium rates |
| GGSM guarantee (80%) | Can offset lack of collateral |
Factor 5: Banking Relationship
| Relationship | Rate Impact |
|---|---|
| Existing customer, 3+ years | -0.25-0.5% possible |
| New customer | Standard rates |
| Multiple facilities with bank | Better negotiating position |
Rate Comparison by Loan Amount
RM50,000 — Monthly Payment Comparison (5-Year Tenure)
| Provider | Rate | Monthly | Total Interest | Total Cost |
|---|---|---|---|---|
| MARA | 3.5% reducing | RM910 | RM4,570 | RM54,570 |
| CapBay BERKAT | 3% reducing | RM898 | RM3,891 | RM53,891 |
| TEKUN | 4% flat | RM1,000 | RM10,000 | RM60,000 |
| BSN Mikro | 4% reducing | RM920 | RM5,245 | RM55,245 |
| Maybank | 5% flat | RM1,042 | RM12,500 | RM62,500 |
| CIMB | 6.5% flat | RM1,104 | RM16,250 | RM66,250 |
| Alliance | 5.9% flat | RM1,079 | RM14,750 | RM64,750 |
| Funding Societies | 1%/month | RM1,112 | RM16,745 | RM66,745* |
*Funding Societies: excludes 10% upfront fee (~RM5,000), actual total cost closer to RM71,745
RM100,000 — Monthly Payment Comparison (5-Year Tenure)
| Provider | Rate | Monthly | Total Interest | Total Cost |
|---|---|---|---|---|
| MARA | 3.5% reducing | RM1,819 | RM9,139 | RM109,139 |
| TEKUN | 4% flat | RM2,000 | RM20,000 | RM120,000 |
| BSN Mikro | 4% reducing | RM1,841 | RM10,489 | RM110,489 |
| Maybank (5% flat) | 5% flat | RM2,083 | RM25,000 | RM125,000 |
| Bank + GGSM (7% EIR) | 7% reducing | RM1,980 | RM18,833 | RM118,833 |
| CIMB (6.5% flat) | 6.5% flat | RM2,208 | RM32,500 | RM132,500 |
| Alliance (5.9% flat) | 5.9% flat | RM2,158 | RM29,500 | RM129,500 |
RM500,000 — Monthly Payment Comparison (7-Year Tenure)
| Provider | Rate | Monthly | Total Interest | Total Cost |
|---|---|---|---|---|
| Bank + GGSM (7% EIR) | 7% reducing | RM7,543 | RM133,626 | RM633,626 |
| Bank + GGSM (8% EIR) | 8% reducing | RM7,794 | RM154,693 | RM654,693 |
| Maybank (5% flat) | 5% flat | RM7,738 | RM175,000 | RM675,000 |
| CIMB (6% flat) | 6% flat | RM8,095 | RM210,000 | RM710,000 |
At RM500K+, the difference between flat and reducing balance is substantial — RM40,000+ in interest over 7 years. Always negotiate for reducing balance at these amounts.
Hidden Costs Beyond Interest Rate
Processing Fees
| Bank/Provider | Processing Fee | On RM100K Loan |
|---|---|---|
| Maybank | ~RM600 documentation fee | RM600 |
| CIMB | 1-2% of loan | RM1,000–RM2,000 |
| Alliance | ~1% of loan | ~RM1,000 |
| TEKUN | None (but 4% Mgmt Fund) | RM4,000/year |
| Funding Societies | ~10% upfront | RM10,000 |
TEKUN's Hidden Charges
TEKUN's 4% flat rate is NOT the full cost. On top of the 4% interest:
- Management Fund: 4% of monthly instalment
- Mandatory Savings: 5% of monthly instalment
- Total monthly outflow = instalment x 1.09
For RM100K over 5 years: RM2,000 instalment + RM180 additional = RM2,180/month actual outflow. The mandatory savings (~RM100/month) are returned after full repayment.
→ TEKUN Calculator (includes hidden costs)
GGSM Guarantee Fee
SJPP charges 1.0% p.a. of the guaranteed amount, paid upfront. For a RM200K loan over 5 years with 80% guarantee:
- Guaranteed amount: RM160,000
- Fee: RM160,000 x 1.0% x 5 years = RM8,000 (one-time upfront)
This effectively adds ~0.8% to your annual cost.
Stamp Duty
Loan agreements require stamp duty at 0.5% of the loan amount:
- RM100K loan: RM500 stamp duty
- RM500K loan: RM2,500 stamp duty
Exception: Budget 2026 exempts micro-financing (up to RM100K) from stamp duty — saving RM500 to RM1,000.
Insurance/Takaful
Some banks require (or strongly recommend) credit insurance:
- MRTT/PRTA: 2-4% of loan amount (one-time)
- Fire insurance (for secured loans): annual premium
- Maybank HERpower: free first-year Persona Lady insurance
How to Get the Lowest Rate
Strategy 1: Apply to Multiple Banks Simultaneously
Different banks have different risk appetites. The same business profile might get:
- Maybank: 5.5% flat
- CIMB: 6.0% flat
- Public Bank: 5.0% flat
Apply to 2-3 banks and use competing offers to negotiate. Banks have discretion to match competitor offers, especially for amounts above RM200K.
Strategy 2: Use Government Guarantee to Unlock Better Rates
GGSM MADANI caps rates at BLR + 2% (~8.4%). If a bank quotes you 9%, ask them to submit under GGSM. The government guarantee reduces their risk, which should lower your rate.
Strategy 3: Start with Government Schemes
If you're a first-time borrower, start with TEKUN or BSN Mikro. Build 12 months of clean repayment. Then approach banks with proof of financial discipline — this track record can knock 0.5-1% off your bank loan rate.
Strategy 4: Negotiate Reducing Balance (Not Flat)
For amounts above RM200K, push for reducing balance pricing. The total interest saving is significant. Some banks default to flat rate quotes because it's simpler — explicitly request EIR-based pricing.
Strategy 5: Time Your Application
Apply when your bank statements look strongest (avoid slow-season months). Banks assess average monthly balance and transaction velocity over 6 months. If December-January are your best months, apply in February.
Rate Forecast: Will SME Loan Rates Change in 2026?
Short answer: Unlikely to change significantly.
The consensus from analysts (BMI/Fitch, Kenanga, DBS, CIMB Research) is that BNM will hold OPR at 2.75% throughout 2026. Only CIMB Research and OCBC Research are outliers, expecting a possible 25bps cut in Q2 2026 if external conditions weaken.
What this means for you:
- If you're planning to borrow in 2026, current rates are your baseline
- Variable-rate loans won't get cheaper (unless surprise OPR cut)
- No reason to delay borrowing waiting for rate cuts
- Fixed-rate/flat-rate loans lock in current pricing regardless of OPR movement
Soalan Lazim / FAQ
Berapa kadar faedah pinjaman SME paling rendah di Malaysia?
Kadar terendah ialah Alliance AZAM (0%, dibiayai zakat untuk asnaf Muslim), diikuti CapBay BERKAT (3%, usahawan Cina sahaja), dan MARA (3.5%, Bumiputera sahaja). Untuk semua rakyat Malaysia, kadar terendah ialah TEKUN pada 4% flat (~7.2% efektif) atau BSN Mikro pada ~4% baki berkurangan. Pinjaman bank bermula dari ~4.5% flat (Maybank) yang bersamaan ~8.5% kadar efektif.
Is 5% flat rate good for an SME loan?
It depends on context. 5% flat equals approximately 9.4% effective rate for a 5-year loan. For collateral-free bank financing, this is competitive — it's close to Maybank's prime rate for established businesses. For secured loans or if you have strong financials, you should negotiate below 5% flat. Compare: TEKUN at 4% flat costs ~7.2% effective, and a bank loan at 7% EIR (reducing balance) costs less total interest than 5% flat.
Why does my bank quote flat rate but TEKUN also quotes flat rate?
Both use flat rate calculation, but the comparison isn't apples-to-apples because of hidden costs. TEKUN's 4% flat includes additional charges (Management Fund + Mandatory Savings) that increase your actual outflow to ~4.36% equivalent. Bank flat rates typically don't have these additional charges, but banks charge processing fees (1-2%) and may require insurance. Always compare total cost of borrowing, not headline rates.
Can I negotiate my SME loan interest rate?
Yes, especially for amounts above RM200K. Banks have discretion ranges of 1-2% within their pricing bands. Bring competing offers from other banks, demonstrate strong financials, and explicitly ask for a rate reduction. Having an existing banking relationship (3+ years) gives you additional leverage. For government schemes (TEKUN, MARA, BSN Mikro), rates are fixed — no negotiation.
Should I take a flat-rate or reducing-balance loan?
Always prefer reducing balance if available — you pay less total interest. The bigger the loan and longer the tenure, the more significant the saving. For RM100K over 5 years: 4% flat costs RM20,000 in interest; 7% reducing balance costs RM18,833. For RM500K over 7 years, the difference can exceed RM40,000. Some banks only offer flat rate for SME term loans — in that case, negotiate the lowest flat rate possible.
Apply for the Best SME Loan Rate
Not sure which lender will give you the best rate? Our consultants can assess your business profile and recommend the most cost-effective financing option — whether that's a government scheme or bank loan. Free consultation, no fees.
The rate is just the beginning: Stamp duty, processing fees, GGSM guarantee fees, and TEKUN's hidden 4% management fund can add RM5,000-15,000 to your loan cost. See the full hidden costs breakdown before signing anything.
Get the Lowest Rate for Your Business
Share your business details — revenue, years in operation, loan amount needed, and whether you have collateral. We'll match you with the cheapest option and help negotiate.
Related Guides & Tools
- MADANI Loan Calculator — Calculate GGSM monthly repayments
- TEKUN Loan Calculator — TEKUN repayment with hidden costs
- Best Bank for SME Loan — Bank-by-bank comparison
- Business Loan Without Collateral — 15 collateral-free options
- MADANI SME Loan (GGSM) — Rate cap at BLR+2%
- TEKUN Loan Malaysia — 4% flat rate explained
- Micro Financing Malaysia — Micro rates compared
- MADANI Loan RM100K — RM100K repayment tables
- MADANI Loan RM200K — RM200K repayment tables
- Eligibility Checker — Check what you qualify for
Last verified: February 2026. OPR at 2.75% per BNM monetary policy statement (January 2026). BLR/BFR/BR rates from respective bank websites (updated post-July 2025 OPR cut). Bank SME loan rates are indicative ranges based on published product disclosure sheets and market observation — actual rates depend on individual credit assessment. Flat-to-EIR conversions calculated using standard IRR methodology. OPR outlook based on BMI/Fitch Solutions (Jan 2026), Kenanga IB (Jan 2026), DBS Research (Jan 2026). Rates and terms subject to change — verify with respective institutions before applying.