Despite the economic decline seen as a result of the COVID-19 pandemic, the Export-Import Bank of Thailand (Exim Thailand) has upgraded its target for new loans in 2021 from 138 billion Thai Baht (THB) to 145 billion THB.
President Rak Vorrakitpokatorn detailed two loan packages the Bank plans to design which will target the needs of small to medium sized enterprises (SMEs) by relaxing loan conditions and making it easier for clients to gain access to loans.
Figure 1. The 5 C’s of Credit
Current conditions impose a heavy burden on clients trying to access a loan by requiring eligible SMEs to post positive financial performance and profit for three consecutive years from the date of application. A proposed new condition would only require SMEs to not have negative owners’ equity for the past three years from the date of application as well as having the business operating and generating income.
In addition to the financial measures released by the Bank of Thailand, Exim Thailand rolled out two relief schemes to assist entrepreneurs affected by the pandemic. The first being a Credit Rehabilitation Scheme which offers a revolving credit facility to SMEs. The scheme imposes an average interest rate of 4.2% per year and a maximum tenure of five years, with an interest rate of 2% per year for the first two years.
The second scheme is the Asset Warehousing Scheme, allowing existing debtors affected by the pandemic to transfer their collateral assets for debt payment to Exim Thailand. The goal of this scheme is to reduce operator’s financial costs and gives them the option to buy back the assets within 3-5 years of the asset transfer date.
Figure 2. Credit Rehabilitation and Asset Warehousing Schemes
For inquiries about loan applications, or any other aspect of corporate finance and trade finance, please contact us at [email protected]