The state-owned Thai Credit Guarantee Corporation (TCG) plans to begin providing credit guarantee service for leasing and factoring offered by non-bank companies from early next year, to widen small firms' access to financial sources.
The new service, facilitated by the amendment of the law governing TCG that came into force on Sept 1, will allow small and medium-sized enterprises (SMEs) better access to leasing and factoring, especially for machinery purchases, said president Nitid Manoonporn.
Leasing and factoring are largely operated by non-bank financial institutions and bank subsidiaries.
In another development, TCG, in collaboration with Kasikornbank (KBank), is offering a loan guarantee service under the portfolio guarantee scheme (PGS) 6 to the bank's SME customers engaging in imports, exports and the tourism business.
KBank wants to extend 1.5 billion baht worth of SME loans under the PGS6 to them by year-end.
Under the PGS 6, SME importers and exporters can seek loans up to 60 million baht without collateral from KBank, of which 40 million is guaranteed by TCG.
For the tourism sector, SMEs operating hotels, restaurants, souvenir shops, tour guides, spas, and other related businesses can get loans worth up to 3.3 times of collateral value, with TCG providing additional loan guarantees of up to 40 million baht.
SME operators from both sectors are entitled to the 1.75% annual credit guarantee fee waiver for the first four years.
With the 100-billion-baht credit guarantee under the PGS6 having been granted at a tepid pace, the government has raised the cap for NPL coverage to 30% from 23.8%. The government and banks are jointly subsidising the annual 1.75% fee of the loan amount for four years to lure SMEs to apply for the credit guarantee.
KBank's executive vice-president Surat Leelataviwat said the two business sectors have show positive loan appetites in line with the country's export recovery and the strong growth of the tourism industry.
KBank, the leader in SME loans and ranking number one in terms of the number of SME borrowers using TGC's loan guarantee service, aims for 27,000 SME borrowers to use the service under the PGS 6.
KBank, the Government Savings Bank, Krungthai Bank, Bangkok Bank and Siam Commercial Bank have all received a credit guarantee quota of 12 billion baht each. The Small and Medium Enterprise Development Bank of Thailand received a 7.5 billion baht quota, while 10 other lenders were allocated 13.5 billion.