Cabinet green lights plan for cash-strapped SMEs

The Cabinet yesterday approved the Finance Ministry’s measures to help small and medium-sized enterprises (SMEs) that have been hit by the slowdown of domestic consumption or lack a proper guarantee to gain access to bank loans.

Sansern Kaewkamnerd, deputy government spokesman, said the measures were the Portfolio Guarantee Scheme (PGS) and the Policy Loan Scheme that were introduced by the Finance Ministry, Small and Medium Enterprise Development Bank and Thai Credit Guarantee Corporation.

"The PGS scheme will be able |to help SMEs that have the ability |to gain loans from commercial banks, while the policy loan scheme will be able to help SMEs that |are financially weaker and SMEs that do not have the ability to access financing from commercial banks," he said.

The PGS had been introduced earlier. The latest round approved yesterday is the fifth stage of the scheme that has a total budget of Bt240 billion and charges a guarantee fee of 1.75 per cent annually.

The fifth stage draws on Bt50 billion of the Bt240 billion budget to help lower the amount that SMEs have to pay for the guarantee fee from commercial banks. This means more SMEs could apply for financial help from the Thai Credit Guarantee Corporation.

Policy loans will be extended by the SME Bank under a Bt15 billion budget. The loans will only be offered to new customers and not those seeking to refinance debts from other financial institutions.

The interest rate is set at 4 per cent, maturity at five years and guarantee fee at 1.75 per cent.

SME borrowers will pay 4-per-cent interest for the first three years but the rate for the fourth and fifth years will be set by the SME Bank’s rate at the time. The Finance Ministry will be the one that pays for the difference to compensate the lenders.

The maximum loan for one SME debtor is Bt40 million. The ministry will subsidise the full guarantee fee in the first year and pay for 0.75 per cent of the guarantee fee in the second and third years.

SMEs will have to pay the full guarantee fee in the fourth and fifth years.