Central bank tweaks B500bn soft loan scheme for SMEs

Central bank tweaks B500bn soft loan scheme for SMEs

The Bank of Thailand is fine-tuning the process of offering 500 billion baht in soft loans with an aim to provide virus-hit small and medium-sized enterprises (SMEs) with better access.

The central bank has talked with banks about tweaking the scrutiny process to give SMEs easier access to the funding source after some barriers arose, said Ronadol Numnonda, the central bank's deputy governor for financial institution stability.

The imminent rejig will prioritise the soft loan approval process but will keep the same borrower categories and loan conditions because the royal decree does not allow any changes in conditions.

Mr Ronadol said the loan adjustment is expected to be completed by this month and will be ready in the next few weeks.

The Bank of Thailand requires banks to report demand for the soft loan scheme every Monday, he said, and the central bank is monitoring loan demand and withdrawals.

"The BoT has talked to banks about soft loan demand and its barriers in order to improve the loan extension process," Mr Ronadol said. "This will help support the liquidity of SME business operators battered by the outbreak and help overcome the crisis."

According to central bank data, 51,991 SMEs have applied for the central bank's soft loans with a credit line request of 80.7 billion baht after the scheme's applications were made available on April 1.

The central bank is offering the 500 billion baht in soft loans at 0.01% interest to financial institutions for two years to re-lend to SMEs with a maximum credit line of 500 million baht at 2% interest. The government will absorb interest charges for six months for SMEs that receive soft loans.

To be eligible, SMEs must operate domestically, be non-listed companies, have a credit line of up to 500 million baht from financial institutions, and continue to service debt or make late payments of less than 90 days at the end of last year.

The maximum drawdown for the soft loans is set at 20% of each bank's loans outstanding at the end of December. The government will partly compensate financial institutions for losses that are incurred.


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