New university graduates can borrow up to 3 million baht each under the government's Tang Tua Dai (self-sustained) Fund, launched yesterday.
The fund, the ruling Pheu Thai Party's latest populist scheme, aims to encourage new graduates to set up their own small- or medium-sized businesses.
Prime Minister Yingluck Shinawatra presided over the launch at Suan Dusit Rajabhat University.
Ms Yingluck said the government has allocated 5 billion baht under the 2013 fiscal budget for the fund.
"To be self-sustaining is quite tough. If young people only have knowledge and ability but lack money, they cannot be self-sustained," she said.
"The fund will provide financial support to young people to create a new breed of SME entrepreneurs."
Deputy Prime Minister and Education Minister Phongthep Thepkanchana said a memorandum of understanding (MoU) has been signed by the Thai Credit Guarantee Corporation, Krung Thai Bank, the Government Savings Bank, the Islamic Bank of Thailand, the Bank for Agriculture and Agricultural Co-operatives and SME Bank to take part in the scheme.
Successful applicants will be offered a 70% loan or up to 2 million baht from a participating bank, and 30% or up to 1 million baht from the fund with a repayment term of seven to 10 years, Mr Phongthep said.
Olarn Chaiprawat, chairman of the fund's administration committee, said students at vocational colleges and universities and those who had graduated within the last five years can apply for loans from the fund.
Applications can be sent to authorised business incubators (ABI) at 56 universities nationwide, and applicants can seek advice from an ABI to prepare their business plan.
Mr Olarn said the fund's committee and the banks jointly will consider loan applications to reduce the risks of SMEs suffering a loss.
The fund has received a good response from young entrepreneurs especially those in software development and food processing businesses.
About 10,000 young business people are likely to apply for the fund, Mr Olarn said.
Supaluck Sophon, a student at Suan Dusit Rajabhat University, said she was considering applying for the fund so she could help her family's small business selling salted egg products.