The Delima - Essay

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Executive Summary
Delima Enterprise Sdn Bhd faced a problem when they decided to take up loan from the commercial bank and realized that their company financial statement was not audited for quite a long time. However the real problem detected here is that the transformation of the business type of Delima which is from an enterprise to a company. The reason here is that I do not think that Encik Zayed who is head of Delima had done the necessary preparation to become a company especially in term of capital. Operating a company definitely has higher requirements and obligations if compare to managing a sole-proprietorship business. The assumption here is that Encik Zayed had not added up any extra capital when forming the company resulting to a cashflow problem. As they turn out to a company they are most probably eligible to handle a more advance project and of course it required more capital to cover the project cost. The main issue is here why they decided to incorporate into company when they yet to have the necessary capital to do so until they decided to take up loan from the commercial bank. Moving on to the next main issue is that the loan itself. First of all we should think on why they want to borrow up to a million ringgit. It will be tough in term of paying back the loan later and whether it is really necessary to borrow more than the secured project cost. Moreover the borrowing was applied to a commercial bank that generally imposed high interest rate and this could be a huge risk to Delima. Delima Enterprise Sdn Bhd is to be said under the Small Medium Enterprise (SME) company category. As a SME company, there are actually many loan schemes being offered by SME bank that is mainly to help the company for growth rather than being a financial loan product like the commercial bank. In other word, they usually offer lower interest rate and this should be a good option for Encik Zayed to consider. Futhermore, the requirement to borrow for SME’s loan is...
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