Thai Credit Guarantee Corporation Launches Fund for SMEs to Purchase Pickups
A new credit guarantee scheme is aimed at enhancing financial access for small businesses in Thailand.
The Thai Credit Guarantee Corporation (TCG) has announced the establishment of a 10 billion baht credit guarantee fund specifically designed for small and medium-sized enterprises (SMEs) seeking to purchase pickups.
This initiative aims to improve the financial access of SMEs and stimulate activity within the struggling automotive sector.
The TCG plans to begin the guarantee process in April, according to TCG President Sittikorn Direksoonthorn.
Presently, lending data from the Bank of Thailand shows a contraction in commercial bank lending by 0.4% in 2024, representing the steepest decline seen in 15 years.
SME loans and hire-purchase loans have also experienced reductions, with the latter witnessing a notable 9.9% fall.
The new pickup loan guarantee program is expected to benefit approximately 12,500 SMEs, which in turn is projected to preserve around 37,500 jobs and generate an estimated economic impact of 41.3 billion baht.
Mr. Sittikorn highlighted that the TCG intends to expedite discussions with the Finance Ministry and various leasing companies to explore the possibility of extending credit guarantees to independent leasing firms, which currently do not fall under existing regulations that limit guarantees to firms where financial institutions hold a majority stake.
A decision is anticipated later this month.
The introduction of this credit guarantee scheme is anticipated to enhance access to financing for SMEs, while also contributing to a reduction in their overall costs.
Leasing companies are expected to maintain interest rates for SME loans at an approximate rate of 6%, consistent with other loan categories, once TCG provides these guarantees.
The guarantee fee is projected to be around 2%, with loan terms set at roughly seven years, facilitating lower monthly payments for SMEs.
Eligibility for the program is restricted to new pickups intended for business use, although it does not mandate that the purchase represent the buyer's first vehicle or dictate a specific type of pickup.
In 2023, TCG aims to guarantee new loans totaling between 60 and 70 billion baht, encompassing a total guarantee fund of 110 billion baht.
This fund is targeted towards businesses recovering from the impacts of Covid-19, vulnerable enterprises, environmentally friendly businesses, sectors aligned with national strategies, and leasing companies.
There is a particular emphasis on supporting the tourism and service industries, which remain vital areas of growth.
Additionally, in the retail loan sector, TCG plans to lower the minimum guarantee threshold this year to approximately 50,000 baht per borrower, aiming to improve access for smaller borrowers.
Last year, the minimum guarantee amount was reduced from 220,000 baht per borrower to 100,000 baht.
This initiative aims to improve the financial access of SMEs and stimulate activity within the struggling automotive sector.
The TCG plans to begin the guarantee process in April, according to TCG President Sittikorn Direksoonthorn.
Presently, lending data from the Bank of Thailand shows a contraction in commercial bank lending by 0.4% in 2024, representing the steepest decline seen in 15 years.
SME loans and hire-purchase loans have also experienced reductions, with the latter witnessing a notable 9.9% fall.
The new pickup loan guarantee program is expected to benefit approximately 12,500 SMEs, which in turn is projected to preserve around 37,500 jobs and generate an estimated economic impact of 41.3 billion baht.
Mr. Sittikorn highlighted that the TCG intends to expedite discussions with the Finance Ministry and various leasing companies to explore the possibility of extending credit guarantees to independent leasing firms, which currently do not fall under existing regulations that limit guarantees to firms where financial institutions hold a majority stake.
A decision is anticipated later this month.
The introduction of this credit guarantee scheme is anticipated to enhance access to financing for SMEs, while also contributing to a reduction in their overall costs.
Leasing companies are expected to maintain interest rates for SME loans at an approximate rate of 6%, consistent with other loan categories, once TCG provides these guarantees.
The guarantee fee is projected to be around 2%, with loan terms set at roughly seven years, facilitating lower monthly payments for SMEs.
Eligibility for the program is restricted to new pickups intended for business use, although it does not mandate that the purchase represent the buyer's first vehicle or dictate a specific type of pickup.
In 2023, TCG aims to guarantee new loans totaling between 60 and 70 billion baht, encompassing a total guarantee fund of 110 billion baht.
This fund is targeted towards businesses recovering from the impacts of Covid-19, vulnerable enterprises, environmentally friendly businesses, sectors aligned with national strategies, and leasing companies.
There is a particular emphasis on supporting the tourism and service industries, which remain vital areas of growth.
Additionally, in the retail loan sector, TCG plans to lower the minimum guarantee threshold this year to approximately 50,000 baht per borrower, aiming to improve access for smaller borrowers.
Last year, the minimum guarantee amount was reduced from 220,000 baht per borrower to 100,000 baht.
