Business Security Act to help SMEs access loans

The act will go into force within 240 days after announcing it in the Royal Gazette in early October.

Chainarong Chochai, deputy director-general of the Commerce Ministry’s Business Development Department, said SMEs would be able to access funding more easily as they could use their assets as collateral.

"Instead of using a mortgage or having to pawn their assets as business security, SMEs will be able to use their assets, raw materials, inventories, aircraft, freight, patents, copyrights and trademarks as guarantees for acquiring loans from financial institutions, or to secure their liabilities," he said.

Chainarong said enterprises would have a greater opportunity to expand under the new Business Security Act. This would benefit the economy as it would promote development in the production sector and increase employment.

To enhance understanding of the new act, the department will hold seminars for SMEs and financial institutions and about 10,000 officials from government agencies and private companies affected by the law, so that it can be enforced efficiently.

It will cooperate with the Thai Chamber of Commerce and trade associations to educate around 6,500 SMEs nationwide on using their assets as business securities this year. To familiarise creditors with the law, the department also intends to educate 1,300 relevant enterprises, including 22 commercial banks, 23 life-insurance firms, and 44 general insurers.

The Business Security Act was supported by the ministries of Commerce and Finance as they sought to solve the problems SMEs were facing in accessing funds from financial institutions.

The law also aims to reduce the problem of loan-sharking, as some SMEs that could not source funds had to rely on illegal creditors.