The Thai Credit Guarantee Corporation (TCG) is preparing to provide credit guarantees for nanofinance loans to help small entrepreneurs gain greater access to formal financing.
According to TCG president Sittikorn Direksoonthorn, the company plans to expand its credit guarantee services to cover nanofinance in the second half of this year. Nanofinance loans are designed for small entrepreneurs who typically require modest amounts of financing, roughly 20,000 baht per borrower.
Under the arrangement, TCG and nanofinance providers will share credit risk. For example, a nanofinance lender may absorb 80% of any loan losses, while TCG would cover the remaining 20%, he said.
Mr Sittikorn said while nanofinance lending criteria are more flexible than those of conventional financial institutions, many small entrepreneurs still cannot access these loans. TCG aims to support the sector so more small business operators can obtain financing through the formal financial system.
Nanofinance loans are designed to help entrepreneurs who previously relied on informal lenders to gain access to formal financing at lower borrowing costs. The loans carry a maximum interest rate of 33% per year and are provided without requiring collateral or a guarantor.
Regarding TCG's performance during the first six months of this year, the company provided loan guarantees totalling 44.5 billion baht, up 129% year-on-year.
TCG set a full-year guarantee target of 70 billion baht.
The guarantees enabled small and medium-sized enterprises (SMEs) to obtain 50.1 billion baht in formal financing, benefiting up to 50,000 businesses and helping to preserve around 342,000 jobs. The top three sectors receiving guaranteed loans were services, accounting for 35.5% of the total, followed by food and beverages at 9.4%, and manufacturing and other trading businesses at 8.8%.
In the second half of the year, TCG plans to focus on providing credit guarantees for SMEs and micro-SMEs under a programme with total guarantees of 20 billion baht, said Mr Sittikorn. The scheme covers loans ranging from 10,000 baht to 100 million baht per borrower. The guarantee fee is 1.25% per year, with guarantee terms of up to 10 years.
Regarding assistance for borrowers whose loans have become non-performing and for which TCG has paid claims to participating financial institutions under its guarantee scheme, the corporation restructured the debts of more than 3,000 borrowers during the first six months of the year, covering outstanding debt totalling 1.57 billion baht.
