The Thai Credit Guarantee Corporation (TCG) has earmarked 10 billion baht as a credit guarantee fund for small and medium-sized enterprises (SMEs) seeking to purchase pickups, improving their access to finance and stimulating the sluggish automotive industry.
The guarantee process is expected to commence in April, said TCG president Sittikorn Direksoonthorn.
According to the latest data from the Bank of Thailand, commercial bank lending contracted by 0.4% in 2024, marking the sharpest decline in 15 years. SME loans and hire-purchase loans shrank, with the latter decreasing by 9.9% in a continued downturn.
The pickup loan guarantee programme is anticipated to benefit 12,500 SMEs seeking to purchase new vehicles, preserving 37,500 jobs and generating an estimated 41.3 billion baht in economic impact.
Mr Sittikorn said the TCG plans to expedite discussions with the Finance Ministry and various leasing companies to determine whether it can extend credit guarantees to independent leasing firms that are not subsidiaries of financial institutions.
Current TCG regulations only allow credit guarantees for leasing companies in which financial institutions hold more than 50% of the shares. A decision is expected later this month, he said.
This credit guarantee scheme should not only improve SMEs' access to financing, but also help reduce their costs, said Mr Sittikorn. Leasing companies are expected to maintain their interest rates for SME loans at roughly 6%, in line with other loan categories, once TCG provides the credit guarantees to SMEs.
The guarantee fee will be around 2%, with a loan term of roughly seven years to ensure lower monthly instalment payments for SMEs, he said.
Only new pickups are eligible for this scheme in order to stimulate automotive production, said Mr Sittikorn.
However, the programme does not require the vehicle to be the buyer's first vehicle purchase, nor does it specify a particular type of pickup. The only requirement is the vehicle must be used for business purposes.
For this year, TCG wants to guarantee new loans totalling 60-70 billion baht, setting aside a total guarantee fund worth 110 billion baht.
Target groups include businesses recovering from Covid, vulnerable enterprises, green businesses, sectors aligned with national strategies, and leasing companies. The tourism and service industries remain promising areas for support, he said.
For the retail loan segment, TCG plans to lower the guarantee threshold to roughly 50,000 baht per borrower this year to enhance access for small borrowers.
Last year the corporation reduced the minimum guarantee amount to 100,000 baht, down from 220,000 baht per borrower in 2022.