Thai SMEs face falling sales, bad debt and tight credit, await state aid
Thai small businesses report average sales declines of 4–5% as late customer payments squeeze cash flow and the government prepares more support
- Thai small and medium-sized enterprises (SMEs) face mounting pressure from slower economic growth, rising costs and weaker purchasing power, leading to falling sales, a non-performing loan (NPL) ratio of 9.16% and delayed debt payments.
- Financial institutions have tightened new lending, contributing to 15 consecutive quarters of contraction in SME credit, while business closures increasingly outnumber new openings.
- Despite existing support measures, businesses are awaiting further government financial assistance to improve liquidity and help them weather the crisis.
Thailand’s small and medium-sized enterprises (SMEs) are struggling to maintain cash flow as sales weaken, customers take longer to pay and banks tighten lending, prompting calls for further government support.
TMBThanachart Bank’s SME Insight 2026 survey found that businesses were reporting average sales declines of 4–5%. The resulting pressure on working capital was compounded by an increasingly evident tendency among trade customers to delay payments.
The difficulties extend beyond short-term funding. Higher operating costs, household debt and competition from low-priced imports are eroding businesses’ ability to recover as the Thai economy grew by just 1.9% in the latest quarter.
The Finance Ministry and Bank of Thailand (BOT) are preparing additional measures and lending support, supplementing programmes already intended to improve access to finance and help businesses modernise.
Bad loans and tighter lending deepen funding pressure
BOT figures put the non-performing loan (NPL) ratio for SMEs at 9.16%, compared with 2.85% across the commercial banking system.
Outstanding SME lending has contracted for 15 consecutive quarters. Lending fell by 5.07% in the second quarter of 2026 as banks became more cautious about new loans, tightened contractual conditions and required higher collateral coverage from riskier borrowers.
Stage 2 loans, which require closer monitoring because credit risk has increased, accounted for 15.9% of SME lending. That elevated share indicates continuing financial vulnerability, although such loans are not necessarily non-performing.
Businesses face three main pressures on revenue and costs.
- Weak purchasing power — High household debt, put at 85.9–90% of gross domestic product (GDP), limits consumers’ ability to spend and restrains domestic demand.
- Rising production costs — Transport, energy, electricity and raw materials have become more expensive, while some inputs are also harder to obtain.
- Competition from low-priced imports — Inflows into Thailand and other Southeast Asian markets, particularly from Chinese producers facing slower demand at home, are making it harder for Thai SMEs to compete.
Factory and business closure figures show the wider strain. Data from the National Economic and Social Development Council (NESDC) and Department of Industrial Works recorded 156 factory closures in the first quarter of 2026, an increase of 11.4%, against 139 new openings, down 63.9%. Closures exceeded openings for the first time in 10 quarters.
Across business sectors, 7,024 businesses registered their dissolution in the first half of 2026, up 12.5%. Their combined registered capital reached 98.9 billion baht, an increase of 224.1%.
Digital adoption has yet to deliver stronger sales
The TMBThanachart survey also identified weaknesses in business planning. About 33% of SMEs had little long-term planning or worked with plans covering only one to two years. Businesses in this group experienced sales declines exceeding 30% amid economic volatility.
Although 87% said they had begun using digital systems and 59% had adopted artificial intelligence (AI), more than 60% reported flat or falling sales.
The survey linked the disappointing results to limited use of technology. Some businesses relied mainly on digital banking to receive and transfer money, without applying digital tools or AI more extensively to reorganise operations, improve production efficiency or add value to products.
SMEs employ more than 13.6 million people and account for a stated 70% of employment, yet contribute only about one-third of Thailand’s GDP. The comparable GDP contribution in South Korea is put at 45%.
The NESDC argues that short-term financing must be accompanied by stronger productivity and business plans adapted to technological change. It has called for conditions attached to foreign direct investment (FDI) promotion to build links with domestic SMEs and require technology transfers.
It also recommends that businesses focus on niche markets they understand and use technology and innovation more extensively to lower costs and improve production, rather than relying on financial assistance alone.
Loan schemes target liquidity and business upgrades
Government agencies and financial institutions have introduced measures to maintain working capital, improve access to credit and finance changes that could reduce costs and strengthen competitiveness.
The main programmes include the following.
GSB Thai business revival soft loans — Government Savings Bank (GSB) funding covers short-term liquidity support under Mitigation, business development under Transformation, future industries under Reinvent Thailand, and upgrades for tourism and related businesses affected by unrest overseas. The overall programme period is given as December 2, 2025–September 30, 2026, while each of the four categories is listed as running from December 2, 2025–March 11, 2027.
- SMEs Credit Boost — A mechanism developed by the Finance Ministry, BOT and commercial banks to reduce credit risk and associated lending costs on new loans, encouraging banks to finance businesses with potential.
- SMEs Secure+ — A measure designed to increase working capital by enabling businesses to obtain additional financing against existing assets or collateral.
- EXIM Support Plus — Support for SME importers and exporters affected by baht volatility and higher shipping costs associated with conflict in the Middle East.
- SME Green Productivity — Financing for productivity improvements and more environmentally friendly production, with a programme period of July 30, 2024–September 30, 2026.
TMBThanachart Bank has also launched ttb sme smart plus to help SME customers access government soft loans and Credit Boost support. The bank aims to lend 6 billion baht through the campaign.
The Revenue Department has accelerated the assessment and repayment of corporate income tax refunds, providing another route for returning working capital to businesses.
Further measures and loans remain under preparation at the Finance Ministry and BOT as businesses await additional help.
