Thai SMEs to receive loan assistance to tide over COVID-19

State-owned Thai Credit Guarantee Corporation (TCG) has approved 57 billion baht (USD$1.8 billion) worth of loan guarantees for SMEs who qualify under the Bank of Thailand’s soft loan scheme.

To be eligible, SMEs must operate domestically, be non-listed companies, have a credit line of up to 500 million baht ($15 million) from financial institutions, and continue to service debt or make late payments of less than 90 days as of the end of 2019.

The 57 billion baht in loan guarantees will also be conditioned on banks’ willingness to provide soft loans to SMEs because TCG will guarantee these two-year loans for another eight years, resulting in lower monthly repayment for SMEs, explained TCG president Rak Vorrakitpokatorn.

Thailand’s central bank is offering 500 billion baht ($15 billion) in soft loans at 0.01% interest to financial institutions for two years to re-lend to SMEs with a maximum credit line of 500 million baht at 2% interest, with the Thai government absorbing interest charges for six months for SMEs that receive soft loans.

READ: Thailand records biggest economic contraction in more than 20 years

Earlier this month, Thailand announced a 12.2% contraction of the economy in the second quarter of 2020, the country’s worst economic performance since the Asian financial crisis in 1998.

According to the Asia Foundation, 70% of Thailand’s national workforce has seen their average monthly income decline by 47%, while 11% of micro and small businesses are facing the real prospect of permanent closure.

With tourism being one of the key pillars of Thailand’s economy, 75% of small tourism-related businesses, perhaps unsurprisingly, have seen revenues decline by up to 75% as international travel continues to be suspended.