SMEs receive aid scheme of B280bn
published : 9 Jan 2020 at 08:01
newspaper section: Business
Commercial banks are expected to offer combined loans worth 100 billion baht, while the state-owned Thai Credit Guarantee Corporation (TCG) is projected to help small and medium-sized enterprises (SMEs) tap credit facilities worth 180 billion baht under the government's latest relief package.
The banking sector is expected to provide loans worth 100 billion baht this year to assist SMEs through government measures, said Predee Daochai, chairman of the Thai Bankers' Association.
Banks will not be required to set aside loan-loss reserves for the additional credit lines for SMEs, which should be an enticement for banks to help their customers, he said.
The cabinet on Tuesday approved the SME relief package, comprising credit guarantees, loan schemes and debt restructuring to help those who want to access financial sources but cannot, as well as those whose debts have soured and those who can access financial institution lending but need additional liquidity.
Mr Predee said liquidity is the main problem facing small businesses in a sluggish economy, but they also need to adapt to the changing environment to maintain sales and survive.
Business adaptation to the changing economic landscape is an important factor that will help them more easily access bank lending, he said.
TCG president Rak Vorrakitpokatorn said the agency's available credit guarantees totals 180 billion baht to help SMEs overcome their troubles.
TCG has revised its credit guarantee requirements to facilitate financial institutions accelerating loan extensions to boost SMEs' liquidity and stretched the credit guarantee period of the portfolio guarantee schemes (PGS) 5, 6 and 7 for another five years.
TCG, under the government's aid measures, will be responsible for assisting two groups of SMEs -- those that are struggling to tap bank loans and those that need additional liquidity.
The 60 billion baht in credit guarantees with a 10-year maturity are expected to help 84,000 SMEs access loans, while extending the period of PGS 5, 6 and 7 for another five years will enable 28,000 SMEs to maintain credit lines of 70 billion baht, said Mr Rak.
He said the credit guarantee also offers an annual fee waiver for two years.
For those who want to boost their financial liquidity, TCG provides them with 50 billion baht worth of credit guarantees through two schemes.
The first scheme with a 10-billion-baht credit guarantee is estimated to aid 10,000 SMEs, while another with a credit guarantee of 40 billion will help another 20,000 SMEs. Both schemes have a 10-year maturity.
The cabinet recently agreed to enlarge TCG's credit guarantee scope to cover leasing and factoring activities, and provide a direct guarantee service amounting to 5 billion baht to potential operators.
The direct loan guarantee is capped at 10 million baht per customer and the fee is set based on a client's risk profile, said Mr Rak.
TCG is ready to offer a direct credit guarantee service to open more opportunities for SMEs to access financial institution loans, he said.
"These measures are urgent and TCG plans to proceed immediately," said Mr Rak.
"I'm confident they can help SMEs access loans after the requirements have been amended to be more flexible and consistent with the changing environment, as well as prevent them from being involved in lawsuits."