Banks: Not all SMEs get soft loans

Banks: Not all SMEs get soft loans

Lenders' criteria a hurdle to B500bn

Bankers admit the Bank of Thailand's 500-billion-baht soft loan package will not be offered to all small and medium-sized enterprises (SMEs) affected by the pandemic because of credit constraints.

Some SMEs may not access soft loans because demand for the cheap loans exceeds supply and applicants must pass lenders' criteria and loan analysis, said Surat Leelataviwat, executive vice-president at Kasikornbank (KBank).

Amid the pandemic, KBank's loan approval criteria will prioritise debt-servicing ability and debt repayment history, he said.

"Applicants with good payment track records will be the first group that receive financial assistance. We intend to help all clients in this difficult situation," said Mr Surat.

Last week the central bank announced a third batch of relief measures, targeting SMEs and corporate bonds. Under the third package, the central bank will issue a royal decree to offer soft loans worth 500 billion baht to SMEs with credit line up to 500 million baht, while repayment from SMEs with a maximum credit line of 100 million baht will be automatically delayed on principal and interest for six months.

KBank, the country's largest lender by assets and SME loans, has prepared an internal system and an operating process to facilitate debtors pending an enactment of the royal decree, which is expected to take place this month.

Despite the limited soft loan amount, assistance should be diversified, he said, adding that the bank has also granted additional loans for working capital to pandemic-hit businesses to support their liquidity to encourage them to avoid lay-offs to guard against impacts on workers, he said.

The bank has provided financial aid to SME clients through several mechanisms under its own measures and under the central bank's scheme. Tens of thousands of SMEs of all sizes could be entitled these mechanisms.

An executive at a commercial bank who requested anonymity noted the impossibility of all SME customers getting soft loans because they must pass bank's lending criteria measured by capability of debt service, financial discipline and good repayment track record, as well as a business plan to comply with good risk management.

Another source in banking circles said banks need to control risk and bad loans amid the crisis, so providing assistance to selective customers is a strategy. Bigger and stronger SMEs have better access to the soft loans, the source said.

In related news, the central bank has approved KBank raising its shareholding in PT Bank Maspion Indonesia Tbk from 10% to 40%.

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