Push for Faster Approval of Soft Loans for SMEs

The Bank of Thailand’s (BOT) amended soft loan scheme has reached 16 billion baht in soft loans to small and medium sized enterprises (SMEs) in its first phase. Despite the BOT declining to comment on the actual expected rate of loan approvals, it has acknowledged that this falls short of the central bank’s projection for the first stage.

The amended soft loan scheme was introduced to improve liquidity of SMEs that have been affected by the impacts of COVID-19, with the BOT setting aside 250 billion baht as a part of the scheme. Upon falling short of its target, the BOT is urging financial institutions to speed up processes for soft loan approvals for SMEs. The failure to reach the target is likely to have resulted from a combination of impact of the third wave of COVID-19, as well as a lack of readiness of financial institutions and their staff to approve the loans.

As of May 17, 2021, the Central Bank had granted around 12 billion baht to 5,465 business operators. On average, lending around 2.1 million baht per borrower. This number was reflected in the BOT’s reports that around 63% of borrowers were Micro SMEs with a credit line of less than 5 million baht. These figures demonstrate the accessibility of these soft loans for small sized businesses.

The BOT held a meeting with financial institutions on Monday 24 May 2021 to examine how the approval of soft loan processes could be improved and sped up. As a result of this meeting and the failure to meet the projected loan approval rate, the Thai Bankers’ Association (TBA) has announced their dedication to grant soft loans worth 100 billion baht under the scheme.

The TBA plans to collaborate with the Federation of Thai Industries, as well as the Thai Chamber of Commerce to collect the names of SME operators who wish to borrow under the soft loan program in order to streamline the loan approval process. The TBA will connect with the Joint Standing Committee on Commerce, Industry and Banking to support struggling SMEs amidst the most recent outbreak of COVID-19.

Through these processes, the Chairman of the TBA, Payong Srivanich expects to see growth in soft loan offerings and approvals over the next six months.

The TBA aims to meet its target of 100 billion baht with the assistance of the top five commercial banks in Thailand – Bangkok Bank, Kasikornbank, Krungthai Bank, Siam Commercial Bank and the Bank of Ayudhya. It is expected that these banks will in total provide around 75 billion baht of the soft loan offerings (around 15 billion baht each) for the next six months. The remaining 15 billion baht will be funded through other smaller financial institutions.

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