Speaking to FMT, PPIM President Nadzim Johan said that not less than 50% of the loan sharks (Ah Long) cases they handled were related to small business activities.

He said many of the victims who had approached PPIM had borrowed small amounts of money, less than RM10,000 from Ah Long, as it was too difficult to get loans from banks due to the excessive conditions imposed.

Nadzim said banks expected entrepreneurs to provide all sorts of documents to show they could make the repayments.

“For many small business operators, this process is too complicated and tedious. So they end up going to Ah Long, who charge very high interest rates.”

Thus, Nadzim said banks should change their approach from merely dispensing loans to helping small entrepreneurs grow their businesses by equipping them with the knowledge to become more sustainable.

“Banks need to put their people on the ground, too. Don’t just expect smalltime business operators to bring in all sorts of documents.

“Let’s say a housewife wants to take a loan to open up a stall. The bank should send people to the location and analyse the situation and advise her whether the type of business will be feasible or how they can improve.”

He added that government and local councils could also do more to make it easier for smaller entrepreneurs to do business and to guide entrepreneurs in achieving success.

MCA Public Services and Complaints Department Head Michael Chong said those whose loans were rejected by banks should not immediately resort to borrowing from Ah Long.

He said banks could not simply dispense loans as they too were answerable to their shareholders.

Chong said entrepreneurs who had been rejected by the banks should try to find out why their loan applications had failed, including checking their credit status or developing a proper business proposal.

“The banks have the expertise. So if they have rejected a loan application, there must be a reason for it,” he told FMT, adding many of the Ah Long cases they handled involved business loans.