BoT okays extension of B500bn soft loan plan

The Bank of Thailand approved the extension of its 500-billion-baht soft loan scheme by six months, and allowed companies listed on the Market for Alternative Investment to apply for the loans, a previous obstacle to participation.

The central bank announced the relaxation of the parameters on Saturday, with the existing scheme scheduled to expire on Oct 22. The existing conditions did not allow listed companies to participate in the soft loan scheme from April 22 to Oct 22.

The rules did allow small and medium-sized enterprises (SMEs) that are performing loan customers of financial institutions with credit lines of no more than 500 million baht as of Dec 31, 2019, to apply for the loan scheme.

Credit line approval is set at no more than 20% of the existing loans outstanding of a borrower.

The Bank of Thailand charges financial institutions 0.01% per year under the soft loan scheme, while banks can charge SMEs a maximum rate of 2% per year. The soft loan programme offers a grace period for interest payment during the first two years, and waives fees for loan applications.

As of Oct 12, the central bank had granted 119 billion baht worth of soft loans to financial institutions, which in turn lent the money to 71,008 SMEs at an average of 1.7 million baht per borrower.

Small SMEs with a credit line of no more than 20 million baht account for the largest portion of borrowers at 76.1%, followed by mid-sized SMEs with credit lines of 20-100 million baht (17.4%), and large SMEs with credit lines of 100-500 million baht (6.4%).

Large SMEs received the most soft loan funds from banks, at 38.4% of the total, followed by mid-sized SMEs at 35.9%, and small SMEs at 25.7%.