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For a Malaysian company buying a factory, banks usually lend 70–80% of the price or the bank’s valuation, whichever is lower, over 20–25 years. The rate is set as the bank’s base rate or base lending rate plus a margin, and most factory loans are floating rate. On a RM3 million factory with an 80% loan of RM2.4 million over 20 years, the monthly repayment is about RM15,200 at 4.5% and RM17,900 at 6.5%.
Factory loans are business loans, so the bank looks mainly at your company: its profit, cash flow and track record. This guide explains how much you can borrow, what affects the margin, and what the repayments look like.
Factory loan at a glance
| Item | What to expect |
|---|---|
| Margin of finance | Usually 70–80% for a Malaysian company or individual; lower for foreign-owned companies |
| Based on | The lower of the purchase price and the bank’s valuation |
| Tenure | Usually 20–25 years, shorter for old buildings or short leaseholds |
| Rate | Floating: the bank’s base rate (BR) or base lending rate (BLR) plus or minus a spread |
| Security | A legal charge over the factory, usually with personal guarantees from the directors |
| Common add-on | A term loan with an overdraft facility, which some banks offer for working capital |
How much will the bank lend?
The bank starts from the lower of the price and its valuation. If you agree to buy a factory for RM3.2 million and the bank’s valuer says it is worth RM3.0 million, an 80% loan is RM2.4 million, not RM2.56 million, and you pay the RM800,000 difference in cash.
Within that, the margin depends on:
- Your company’s finances: profit, cash flow and existing debts. This matters more than the property itself.
- Years in business: most banks want at least two to three years of audited accounts.
- Tenure of the land: freehold is easiest. A leasehold factory with few years left gets a lower margin and a shorter tenure, because the loan should end well before the lease does.
- Age and condition of the building, and whether it has a CCC or CF.
- Location and resale value: a factory in an established park such as Senai, Kulai or Pasir Gudang is easier to finance than a one-off building on a small road.
- Ownership of the borrower: many SME loan products require the company to be at least 51% Malaysian-owned. Foreign-owned companies usually get lower margins.
👉 Ask the bank for a valuation before you sign the SPA if you can. If the valuation comes in low, you will know how much more cash you need before you are committed.
Monthly repayment tables
These tables show the monthly repayment on a fully amortising loan. Use them to check your cash flow before you make an offer.
| Loan amount | 4.5% (20 yrs) | 5.5% (20 yrs) | 6.5% (20 yrs) |
|---|---|---|---|
| RM1,200,000 | RM7,592 | RM8,255 | RM8,947 |
| RM2,400,000 | RM15,184 | RM16,509 | RM17,894 |
| RM4,000,000 | RM25,306 | RM27,515 | RM29,823 |
| Loan amount | 4.5% (25 yrs) | 5.5% (25 yrs) | 6.5% (25 yrs) |
|---|---|---|---|
| RM1,200,000 | RM6,670 | RM7,369 | RM8,102 |
| RM2,400,000 | RM13,340 | RM14,738 | RM16,205 |
| RM4,000,000 | RM22,233 | RM24,563 | RM27,008 |
A longer tenure lowers the monthly payment but costs more in total. On RM2.4 million at 5.5%, the total interest is about RM1.56 million over 20 years and about RM2.02 million over 25 years.
How interest rates affect your loan
Most factory loans are floating, so the rate follows the bank’s base rate, which moves with Bank Negara’s Overnight Policy Rate (OPR). The OPR has been held at 2.75% since July 2025. If the OPR rises by 0.25%, the monthly repayment on a RM2.4 million, 20-year loan at 5.5% goes up by about RM340, to roughly RM16,850. Leave some room in your budget for that.
Buying versus renting, in cash flow terms
At today’s Johor prices of about RM400 per sq ft to buy and RM2.50 per sq ft a month to rent, a 10,000 sq ft factory costs about RM4 million to buy or RM25,000 a month to rent. An 80% loan of RM3.2 million over 20 years at 5.5% is about RM22,000 a month, plus a deposit and costs of about RM1 million. The monthly payment is similar to rent, but buying needs much more cash upfront, and you own the building at the end. Our article on investing in industrial property in Johor covers the returns in more detail.
Steps from application to drawdown
- Pre-check with two or three banks using your company’s accounts. This takes about a week.
- Letter of Offer and booking deposit with the seller, ideally with a condition that the sale depends on your loan approval.
- Full application and valuation. The bank appoints a valuer and reviews your documents. Approval usually takes two to four weeks once the bank has everything. See the documents banks ask for.
- Letter of Offer from the bank. Check the margin, rate, tenure, lock-in period, guarantees and any conditions before you accept.
- Sign the SPA and loan agreement. The loan agreement is stamped at 0.5% of the loan; see stamp duty on a factory.
- Drawdown at completion. The bank pays the seller (or the seller’s bank) when the transfer is ready.
Loans for new factories from developers
For a new factory project, the bank releases the loan in stages as construction progresses, and you pay interest only on the amount released. Check that the developer’s project is on the bank’s approved list, which makes the valuation and approval faster. For building your own factory on industrial land, see how a build-to-suit factory in Johor works.
Frequently asked questions
Can I get a 90% loan for a factory?
It is uncommon for industrial property. Some banks go above 80% for strong borrowers or under government guarantee schemes, but most buyers should plan for 70–80%.
Can a sole proprietor or new company get a factory loan?
Yes, but it is harder. Banks want to see at least two years of income. A new company may need the directors’ personal income, more collateral, or a guarantee scheme. See why factory loans get rejected.
Is factory loan interest tax deductible?
If your company uses the factory for its business, the loan interest is generally a deductible business expense. If you rent the factory out, the interest is deductible against the rental income for the period it is let.
Ready to look? Browse factories for sale in Johor with prices and sizes, or contact Jimmy Toh for help with a shortlist.
This article is general information, not financial advice. Each bank sets its own margins, rates and conditions, and they change over time, so please get a written offer from your bank before you commit.
