GSB readies B100bn for small firms

State-run Government Savings Bank (GSB) is prepared to offer a fresh batch of soft loans worth 100 billion baht to help virus-ravaged small business operators in the tourism and service sectors keep their employees on payroll.

GSB proposes charging interest of 0.01% per year to commercial banks, which will relend to borrowers at 2% interest, Finance Minister Uttama Savanayana said.

The bank will also direct extending soft loans to its borrowers.

Small and medium-sized enterprises (SMEs) in tourism and service value chains including homestays, hotels, Thai massage operators and restaurants are eligible for the new soft loan scheme, he said after accompanying Deputy Prime Minister Somkid Jatusripitak to deliver the policy to GSB.

Unlike the Bank of Thailand's sponsored scheme of 500 billion baht in soft loans offered only to existing customers, GSB's new soft loans will be given to both new and existing borrowers, said Mr Uttama.

The central bank's soft loans are targeted at existing customers because the authorities want lenders to extend the cheap-rate loans as fast as possible.

Thai Credit Guarantee Corporation will offer loan guarantees for the new soft loan borrowers and it is considering a non-performing loan-sharing ratio.

Apart from the soft loans, the state-run bank plans to offer loans worth 20 billion baht to self-employed workers, merchants and salary earners jolted by the pandemic.

The loans will charge 0.35% interest per month and the bank will cap the lending amount at 50,000 baht per borrower, he said.

The approval criteria for the new 20 billion baht in loans will be eased, waiving the requirement for either asset collateral or a personal guarantee if borrowers seek loans worth 50,000 baht.

In a related development, Mr Somkid said GSB will consider extending its debt holiday period and reposition itself to focus on small business operators and low-income earners.

According to GSB's loan portfolio, government loans account for as much as 30%.

As few entrepreneurs want to start out in this environment, GSB will take responsibility for helping startups or recent graduates who want to be entrepreneurs, he said.

GSB president and chief executive Vitai Ratanakorn said 120 billion baht of the bank's existing 150 billion baht in soft loans were doled out.