Report finds skewed SME loan uptake

Only 17% of 3 million small and mediumsized enterprises (SMEs) have access to commercial bank loans, and as much as 84.2% of the total SME loan portfolio is concentrated in 50,000 operators, says a report by the Puey Ungphakorn Institute for Economic Research.

The Bank of Thailand’s think tank found that 520,233 SME operators, of which 10% take up 84.2% of SME loans, have borrowed from commercial banks, said principal researcher Nada Wasi.

Of the total, 130,844 are juristic SMEs and 389,389 are individuals.

SMEs that do not use funding sources from commercial banks comprise the unbanked and those who are able to access to other financial sources such as specialised or community financial institutions.

The highest loan concentration was spotted in SMEs engaged in infrastructure, while those in the construction sector had the lowest loan concentration, Ms Nada said.

The research is based on data from two sources — 15 Thai commercial banks’ reports to the Bank of Thailand as of January 2018 and the National Credit Bureau — and the data excludes micro SMEs.

“Thai SMEs that are individual entrepreneurs represent 75% of the total but they account for only 25% of the total SME loan portfolio,” Ms Nada said.

Nearly half of individual SMEs who access commercial bank loans are in the commercial sector, she said.

The research found that 63.3% of individual SMEs have single lending accounts, while less than 1% of individual SMEs have more than 10 lending accounts. For juristic SMEs, 42% of them have only one lending account, and 8.3% have more than 10 accounts.

General and overdraft loans are the most popular loan types among individual SMEs that have only one lending account, while hire purchase and general and overdraft loans gain the most popularity among juristic SMEs with one lending account.

Ms Nada said 67% of SMEs with more than one lending account use the service from only one bank.

“This reflects that the banking relationship is significant for SMEs’ decisions, or there may be lower costs when borrowing from one bank,” she said.

SME non-performing loans amount to 252 billion baht, representing 6.2% of the total SME loans extended by commercial banks. In numbers, 42,094 SMEs, accounting for nearly 8% of SME borrowers, saw their debts turn sour.