Illustrative business example — Mei's equipment upgrade
This is a made-up example, not an actual business, financing offer or eligibility finding.
Mei runs a small metalworking business in Malaysia. She wants to replace an ageing air compressor with equipment expected to use less electricity while supporting the workshop's production. Her business would own and maintain it. We will follow this same proposal through all ten steps, without assuming a price, saving, approval timetable or successful application.
1. Define the project, its purpose, costs and ownership
Put the idea into a short project brief. Explain what you want to change, where the work will happen, why it matters and who will be responsible. Identify the business applying for financing and who will own, operate and maintain the asset.
Build a cost estimate that includes installation, necessary site work, downtime, maintenance and measurement, as well as the purchase price. Separate quotations from estimates. Decide what your business could contribute and how much funding you need, including any cash needed before the equipment starts operating.
For Mei: The brief covers the compressor, installation, removal of the old unit, maintenance and how the workshop would operate during the changeover. She identifies the supplier and any costs still needing a quotation.
Your first decision is whether you have a defined project and a realistic funding need. If the scope is still unclear, resolve that before requesting a firm offer.
2. Establish the starting position and expected improvement
A baseline is your record of the situation before the project. Choose a relevant period and measure, then explain the change you expect, when it could happen and how you would check it.
For an environmental project, consider energy, water, waste or another measure suited to the purpose. For a social project, describe the need, intended beneficiaries and how you would assess whether access or outcomes improved. Also consider possible harm and how you would manage it.
For Mei: Electricity bills help establish the workshop's overall use. To estimate the compressor's contribution, she explores equipment measurements and operating records with the supplier. She records operating hours and production levels, and labels the supplier's projected reduction as an estimate. A lower bill alone would not show how much of the change came from the new compressor.
If you need help organising wider environmental, social and governance (ESG) information, Capital Markets Malaysia's Simplified ESG Disclosure Guide, Version 2 provides an SME starting point.
Aim to explain the improvement and its evidence clearly enough for someone else to assess it.
3. Assess cash flow, repayment capacity and key assumptions
Cash flow means money coming into and leaving your business. Prepare a forecast showing how you would cover the project, ongoing business costs, existing debts and the proposed financing payments. A useful project still needs a workable payment plan.
Keep savings in electricity use separate from savings in ringgit: the money estimate also depends on prices and operating conditions. Label assumptions about sales, customer payments, supplier costs and when the project will start delivering benefits.
Try a more difficult version of the forecast. What happens if installation is delayed, savings are lower, customers pay late or a variable financing rate rises? Plan how you would meet payments during those periods. Keep an unconfirmed grant or tax benefit out of the cash you rely on to pay a supplier or instalment.
For Mei: She checks whether ordinary workshop cash flow could support repayments during installation and if the compressor delivers less saving than expected. She also allows for maintenance and existing borrowing.
If the plan depends on everything going right, reconsider the scope, contribution or timing before proceeding.
4. Compare suitable funding routes
Use your brief and forecast to shortlist routes. For an identifiable environmental investment, explore a relevant green loan or Islamic financing facility. You could also compare a suitable ordinary business facility or an equipment lease where offered. For any lease or service arrangement, establish ownership, payment and maintenance responsibilities.
A green project loan focuses on eligible uses of the money. Sustainability-linked financing connects terms to agreed performance targets. The guidance accompanying the Green Loan Principles explains that distinction.
Bonds and sukuk raise money from investors and involve issuance, disclosure and reporting work. If you are considering them, take the same funding need to an arranger for a feasibility and cost discussion. Our bond guide and green and SRI sukuk guide explain these routes.
For Mei: She compares a facility to buy the compressor with a lease, including ownership and maintenance. RHB's published SME green-financing page covers renewable-energy and eco-efficient equipment and machinery; it is a product to investigate, subject to assessment of her proposal.
Use our route-choice guide to narrow the shortlist. Choose by fit, costs and commitments, with the sustainability label forming part of that assessment.
5. Check eligibility, permissions and incentive timing
Ask whether both your business and the proposed expenditure fit the product or scheme. Clarify which purchase, installation and related costs are eligible, and what you would need to fund yourself. Establish which site permissions, technical checks or certifications apply, and when they must be completed.
Check incentives before committing costs so you understand the sequence. That does not mean every application is submitted before spending. For example, MIDA's green-technology guideline requires application before qualifying capital expenditure for its business-purpose Green Investment Tax Allowance (GITA) route. MGTC's own-consumption asset guideline describes submission after commissioning, within its expenditure and application windows. Ask which route and current conditions apply to you.
If exploring the Green Technology Financing Scheme (GTFS), the official portal advertises 5.0 applications as open. Confirm remaining funds, current documents and acceptance for your category with the administrator and bank.
For Mei: She checks the asset criteria, installation arrangements and whether any own-consumption incentive fits before ordering. She obtains answers about timing and eligible costs rather than assuming an efficient machine qualifies.
Our incentives and SME support guide explains guarantees, reimbursements and tax routes. Ask whether any proposed combination of support is permitted.
6. Prepare a proposal and approach a bank or arranger
Bring together the project brief, financing request, repayment forecast, quotations, expected improvement and measurement plan. Explain unresolved items openly. Use Financing Readiness to assemble the detailed pack, then obtain the financier's current application checklist.
Bank requirements differ. As one example, CIMB's SME Renewable Energy Financing-i page lists financial records, bank statements and a solar-installation proposal, with lists varying by business form. That solar product illustrates how business and project evidence come together; it does not establish a route for Mei's compressor.
For BNM's SME funds, applications go through participating financial institutions and remain subject to their normal credit assessment. See BNM's SME financing information. For bonds or sukuk, begin with an arranger or adviser who can assess the proposed issuance route; the SC's bonds and sukuk directory locates relevant standards and rules.
For Mei: She approaches a bank offering relevant equipment financing, explains her records and gaps, and asks which costs, documents and assessment steps apply.
Agree a named contact and next actions, including what information is needed before the enquiry can progress.
7. Understand assessment, due diligence and any external review
Expect questions about both the payment plan and the project's sustainability case. Due diligence means checking the information and risks behind the proposal. Ask what checks the financier needs, who carries them out and whether you will pay for them.
An external review is an assessment by someone outside your business. Its scope might concern framework alignment, technical evidence or the use of funds. Establish what it covers and what it leaves untested.
The Green Loan Principles are voluntary industry guidance and recommend external review where appropriate. They do not make a paid external opinion compulsory for every SME application. For issuance, review requirements vary: the SC's unlisted rules and retail rules treat project-purpose SRI sukuk differently. Ask the arranger which rules and additional commitments apply.
For Mei: She asks how the bank will assess the energy estimate, whether a technical assessment is needed and what it costs. She responds to questions with supporting records and updated assumptions.
A favourable project assessment does not settle the credit decision. If the proposal cannot proceed, ask what the obstacle is and whether a revised scope or funding plan could address it.
8. Compare offers, full costs and contractual obligations
Ask for written terms and the current product disclosure sheet (PDS), which summarises key product information. Read these alongside the offer and full contracts. CIMB's renewable-energy financing PDS expressly distinguishes its indicative information from final terms after credit assessment.
Compare offers for the same project scope and funding need:
Scroll sideways to read the table ↔
| Part of the offer | What to understand before accepting |
|---|---|
| Amount and release of funds | Approved amount, eligible costs, your contribution, release conditions and payment timing |
| Payments and total cost | Interest or profit calculation, payment schedule, total amount payable and effect of any variable rate |
| Other expenses | Applicable legal, stamp, guarantee, insurance or takaful, technical-review and reporting costs, including recurring costs |
| Security and guarantees | Assets pledged and commitments required from owners or other parties |
| Contract conditions | Financial promises or restrictions, sustainability commitments and consequences if obligations are not met |
| Changes and exit | Scope-change procedure, cancellation, early settlement and any fees or restrictions |
RHB's SME green-equipment PDS illustrates why these details matter: it addresses fees, variable-rate risk, security and guarantors. Obtain the document for your particular financing structure.
For Mei: She compares the cash her business must provide, the payments and the reporting work. She asks how any guarantee affects the offer and what obligations remain with her business and any personal guarantor.
Resolve unclear terms before signing. For issuance, ask the arranger to include initial and ongoing transaction costs in the comparison.
9. Manage implementation, disbursements and records
Disbursement means release of the financing. Check which conditions must be met before money can be released, who receives it and whether payments happen in stages. Match this to the supplier's deposit, delivery and completion terms so you can identify any cash gap.
Give someone responsibility for delivery, someone for payment records and someone for performance data; in a small business, one person may handle several roles. Keep invoices, proof of payment, delivery records, commissioning information and relevant approvals together. Use a simple register to connect each financed cost to the approved project.
For a loan following the Green Loan Principles, money must be tracked appropriately. A dedicated account is one permitted method; the principles also allow other suitable tracking arrangements. Confirm what your agreement requires.
For Mei: If financing proceeds, she checks the release conditions against the supplier's schedule and keeps the equipment and payment records. She arranges measurement from commissioning. If the supplier or equipment changes, she checks whether the financier's consent is needed before committing to the substitution.
Keep the financier informed through the agreed process when delays, costs or project changes affect the plan. Update the cash-flow forecast as well as the delivery schedule.
10. Report how funds were used and what outcomes were achieved
Reporting answers two different questions:
- Use of funds: Which approved costs were paid or allocated, how much financing was used and what remains unallocated?
- Outcomes: What environmental or social improvement was expected, what has been measured and how was it calculated?
Agree the recipients, format, frequency and any verification requirements before accepting the financing. Check whether reports go to the lender, investors, an administrator or the public; a bank's information request is not automatically a public-reporting obligation. The Green Loan Principles address spending and expected or achieved impact, with assumptions disclosed. Your route and documents determine the applicable reporting duties.
For Mei: If the project goes ahead, her spending report links financed expenditure to the compressor and installation. Her outcome report compares measured use with the baseline, records changes in production and operating hours, and explains any data gaps. If measured results are not yet available, she identifies the figure as an estimate. She keeps the electricity-use result separate from the ringgit saving.
An invoice shows expenditure; it does not prove an environmental improvement. Use the reports to understand whether the project is delivering, investigate shortfalls and decide what to improve next.