BoT sure new scheme will help SMEs

‘‘ Given the third wave and the spread of the virus, this will hurt already vulnerable SME businesses. SUWANNEE JATSADASAK Senior director, Regulatory policy department 2, BOT

The Bank of Thailand (BoT) is expecting small and medium-sized enterprises (SMEs) to feel the brunt of the latest wave of Covid-19 infections.

However, the central bank insists its latest soft loan scheme would allow entrepreneurs facing higher risk during the pandemic to access funds more easily.

“Given the third wave and the spread of the virus, this will hurt already vulnerable SME businesses,” said Suwannee Jatsadasak, senior director of the regulatory policy department 2. “However, the central bank has been closely monitoring the new wave of infections and is ready to implement additional measures to help borrowers hit by the pandemic both commercially and individually.”

According to Ms Suwannee, the central bank’s amended soft loan scheme worth 250 billion baht will allow a maximum debt guarantee coverage from the Thai Credit Guarantee Corporation (TGC) of 40% of the total credit line offered to a commercial borrower, up from 30% earlier. As a result, this will provide more opportunity for higher-risk SMEs to access the loan programme.

On March 23, the cabinet approved financial relief measures worth 350 billion baht to help the business sector recover from Covid-19 after the 500-billion-baht aid programme underperformed.

The measures included 250 billion baht worth of soft loans provided by the central bank and another 100 billion baht for asset warehousing to assist debtors who are unable to repay loans.

Under the 250-billion-baht loan scheme, operators with a credit line of no more than 500 billion baht with financial institutions can seek loans of no more than 30% of the credit line as of Dec 31, 2019, or Feb 28 this year depending on which is higher, however, the total should not be higher than 150 million baht.

For entrepreneurs who have no credit line with any financial institution as of Feb 28, they can obtain loans of no more than 20 million baht at an annual interest rate of no more than 2% during the first two-year period of their contract with an average rate of no more than 5% per year.

The guarantee period will last no more than 10 years and the maximum claim guarantee is no more than 40% of debt under the scheme.

The amended measures aim to address limitations of the existing 500-billion-baht soft loan measure by expanding the pool of eligible borrowers to include both new and existing borrowers, raising credit limits, lengthening loan tenors, and amending interest rates to better support business recovery.

Ms Suwannee said financial institutions have been talking with SME borrowers about the new soft loan scheme, which is scheduled to take effect next Monday, adding that the 250 billion baht soft loan budget is expected to be sufficient to support businesses’ liquidity in the shortterm while helping them recover their operations in the next one to two years.