Thailand: ฿10 Billion Loan Plan Creates 37,500 Jobs
Thailand is injecting a much-needed boost into its small and medium-sized enterprise (SME) sector and the struggling automotive industry with a substantial ฿10 billion (approximately US$XXX million) credit guarantee program. The Thai Credit Guarantee Corporation (TCG) has allocated these funds to facilitate SME access to loans for purchasing new pickup trucks—a crucial tool for many Thai businesses. This initiative, launching in April, aims to invigorate economic activity by empowering SMEs with improved access to finance.
The program’s timing is critical, following a challenging year for lending. Data from the Bank of Thailand reveals a 0.4% contraction in commercial bank lending in 2024, the steepest decline in 15 years. SME loans and hire-purchase loans were particularly affected, with the latter experiencing a significant 9.9% downturn. This new initiative offers a lifeline to SMEs struggling to secure financing for essential business vehicles.
The TCG projects the program will benefit approximately 12,500 SMEs, safeguarding 37,500 jobs and injecting an estimated ฿41.3 billion (approximately US$XXX million) into the economy. The initiative specifically focuses on new pickup truck purchases to stimulate automotive production. This strategic decision aims for a ripple effect, boosting both the automotive sector and the wider economy through increased SME activity.
TCG President Sittikorn Direksoonthorn highlighted the program’s dual benefits: improved access to finance and reduced costs for SMEs. The corporation anticipates leasing companies will maintain interest rates for these loans at around 6%, comparable to other loan categories, thanks to the TCG guarantee. The guarantee fee will be approximately 2%, with loan terms extending to around seven years to minimize monthly payments for participating SMEs.
To further expand the program’s reach, the TCG is exploring extending credit guarantees to independent leasing companies not currently covered. Existing regulations limit guarantees to leasing companies in which financial institutions hold a majority stake (over 50%). Mr. Sittikorn indicated a decision on this potential expansion is expected later this month, potentially widening the program’s positive impact.
Importantly, the program’s eligibility criteria are designed for maximum inclusivity. While the vehicle must be used for business purposes, there are no restrictions on it being the buyer’s first vehicle purchase, nor are there specific pickup truck model requirements. This flexibility allows a wider range of SMEs to participate, maximizing the potential for economic stimulation.
This pickup truck initiative is part of a broader TCG strategy to guarantee ฿60–70 billion in new loans this year, backed by a total guarantee fund of ฿110 billion. The corporation prioritizes support for businesses recovering from the COVID-19 pandemic, vulnerable enterprises, green businesses, sectors aligned with national strategies, and leasing companies, with a continued focus on the tourism and service industries. Additionally, the TCG is reducing the minimum guarantee threshold for retail loans to approximately ฿50,000 per borrower, further enhancing accessibility for smaller businesses. This continues a trend from previous years, where the threshold was reduced from ฿220,000 in 2022 to ฿100,000 in 2024. This multifaceted approach demonstrates a commitment to fostering a robust and inclusive economic recovery in Thailand.
