SMEs in 8 provinces to get Pracha Rath loans

Eight provinces have been initially targeted for the programme. Besides Songkhla, they are Krabi, Chon Buri, Nakhon Pathom, Phitsanulok, Chiang Mai, Ubon Ratchathani and Udon Thani.
The fund will focus on extending loans to small and medium-sized enterprises making retail products. In each province, 75 per cent of the beneficiaries will receive loans of no more than Bt3 million each and the remaining 25 per cent no more than Bt10 million each. 
The loans will bear a lending rate of 1 per cent with a repayment period of seven years and a three-year grace period.
The initially approved loan amount is Bt99 million per province. Later, each province’s gross domestic product and number of SMEs will be used to redefine the loan amount, which could be boosted to a range of Bt186 million to Bt205 million per province.
To mitigate risk of non-performing loans, stringent conditions will be set. For example, an SME is required to have one accounting report and a self-collateralised juristic person. If the NPL rate gets higher than targeted, the conditions will be reviewed and adjusted.
The fund is not concerned about NPLs from SMEs, particularly start-ups, as those approved will be high-potential enterprises, and most of the SMEs that will request a loan will use the proceeds to improve their machinery and automation, DIP director-general Pornthep Karnsub said. 
“The three-year grace period will allow these SMEs to complete the installation of new machinery and start manufacturing products, and then generate income to repay their loans. The lending rate of only 1 per cent is low and will not be too much of a burden on business operators,” he said.
He said the loan-approval framework was set on three conditions: business groups targeted by each province for promotion; business groups complying with the strategy set by each province; and business groups requiring improvement of production efficiency. 
Loan approvals will be made by three subcommittees: a provincial fund management committee; a financial analysis subcommittee; and a committee for SME promotion and development.