Banks ready for SME single account scheme

There are about 3 million SMEs, but only 700,000-900,000 can get bank loans. The others, especially small businesses, either don’t want to bear the tax or don’t have enough collateral as requested by the bank.
The Revenue Department opened single account registration from January 15-March 15. The register reported 400,000 enterprises to apply for the scheme.
Under the scheme, SMEs with annual sales of up to Bt500 million that register with the Revenue Department will be exempted from this year.
Registered SMEs with registered capital of no more than Bt5 million and annual revenue of Bt30 million or less for the 2015 accounting year will be exempted from tax for the 2016 accounting year.
Those SMEs making an annual net profit of up to Bt150,000 will be exempted from corporate tax. Enterprises with net profit exceeding Bt300,000 will be charged a 10-per-cent corporate tax for the 2017 accounting year.
From 2018, SMEs will have to pay normal tax rates.
Mongkol Leelatham, president of the Small and Medium Enterprise Development Bank of Thailand, said recently that the single account scheme will encourage SMEs to enter the tax system.
The bank will launch a loan product similar to a soft loan to attract registered SMEs.
Patchara Samalapa, executive vice president for SME banking at Kasikornbank, noted that the bank will prepare a platform for registered SMEs to support the scheme.
The Commercial Collateral Act, which will go into effect in July, is a new opportunity for SMEs that don’t have fixed assets because the act allows movable assets such as machines or intangible assets such as accounts receivable to be used as collateral.
Currently, SMEs use deposits and fixed property as collateral to access bank loans.
Before the act, banks were not allowed to count moveable property as collateral and in the case where banks allowed moveable property to be put up as collateral, the borrowers had to deliver the asset to the lender, making it impossible for SMEs to use the asset to do business.
After July 4, properties such as machinery, raw materials, inventory, receivables and intellectual property could be exchanged for credit without delivering those assets to banks.
The government hopes the act will help boost the ranking of Thailand in the ease of doing business, Finance Minister Apisak Tantovorawong said.
Patchara of KBank said implementation might take much time because moveable assets still give banks more to worry about than fixed assets.
The Intellectual Property Department should help banks assess the value of intellectual property and to sell forfeited intellectual property.