New act to boost SME funding access
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ALMOST 3 million small and medium-sized enterprises and start-ups should find it easier to access loans after the new Secured Transactions Act went into force on Saturday.
Commerce Minister Apiradi Tantraporn said SMEs would be able to access funding more easily as they could use their assets as collateral.
“More than 300,000 SMEs and start-up businesses are expected to access more loans this year after the new act has been implemented. This should help stimulate economic growth as SMEs expand their businesses, while Thailand will also be more competitive,” she said.
Apiradi said the country’s Ease of Doing Business ranking by the World Bank should improve in the near future.
Under the new law, instead of using a mortgage or having to pawn their assets as business security, SMEs will be able to use such assets as raw materials, inventories, aircraft, freight, patents, copyrights and trademarks as guarantees for acquiring loans from financial institutions, or to secure their liabilities.
Related rules
To prepare for the new law, the ministry’s Business Development Department has issued 13 other related regulations and developed an online system to help enterprises apply for loans.
Financial institutions can |register their secured collateral with the department at any time through the online system, Apiradi added.
Pornchai Thiraveja, deputy director-general of the Fiscal Policy Office, said lending to SMEs and start-ups should increase by about 20 per cent this year thanks to the new law.
Besides banks and financial institutions, the Finance Ministry has also proposed a regulation to allow six other businesses to be secure agencies or receivers of guarantees for SMEs. Those businesses include trusts, mutual funds, asset-management companies and factoring providers.
Predee Daochai, president of the Thai Bankers Association, said the new law should allow more SMEs to access loans and promote more business growth.
The Secured Transactions 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.
