Latest loan guarantees aimed at SMEs
The state-owned Thai Credit Guarantee Corporation (TCG) plans to introduce Portfolio Guarantee Scheme 10 (PGS10) later this month, which aims to make it easier for small and medium-sized enterprises (SMEs) to access credit guarantees at a lower cost.
The program is designed to provide coverage for everything from street vendors to medium-sized businesses, TCG President Sittikorn Direksoonthorn said. In terms of value, PGS10 ranges from 10,000 baht to 40 million baht per borrower, he said.
The cabinet approved the scheme late last month for guarantees worth 50 billion baht up to a maximum of 10 years.
The agency expects the value of its loan guarantees to reach 30 billion baht within months of launch, Mr Sittikorn said.
Under the PGS program, the government provides financial support to TCG, allowing the agency to charge customers a lower fee.
The PGS10 system divides customers into six groups, with different fees depending on the category. One group includes startups, recent graduates, freelancers, and SMEs who have never applied to a financial institution before. The program offers this group a guarantee of up to 100,000 baht per customer.
The annual fee for this group is 3% of the guaranteed loan amount. The fee is waived for the first two years, after which TCG and the customer each pay half of the guarantee fee for the duration of the guarantee period. The agency provided 1 billion baht worth of guarantees for this group in the initial phase.
For small traders, TCG offers guarantees of up to 200,000 baht per customer with an annual fee of 1.75% of the guaranteed amount and a fee waiver for the first two years. The agency provided 3 billion baht to this group in the initial phase.
TCG offers SMEs registered as individuals guarantees of up to 40 million baht per borrower. The annual fee is 1.75% of the guaranteed amount and a fee waiver for the first two years. The agency reserved 10 billion baht for this group in the initial phase.
For SMEs registered as legal entities, the agency offers loan guarantees of up to 40 million baht with an annual fee of 1.25% waived for the first three years. The agency reserved 15 billion baht for this group in the initial phase.
For SMEs looking to adopt environmental, social and governance (ESG) practices, TCG offers loan guarantees of up to 40 million baht with an annual fee of 1.5% of the guaranteed amount and a waiver for the first four years. The agency reserved 500 million baht for this segment.
The PGS10 program ends on February 27, 2025. It is expected to generate 200 billion baht in economic benefits and help 700,000 workers keep their jobs.
Mr Sittikorn said TCG aims to issue 170 billion baht worth of loan guarantees this year, with 15 billion being renewed in the first two months of this year.