Thailand’s small and medium enterprises (SMEs) are receiving a important boost through increased loan guarantees from the Small and Medium Enterprise Development Corporation (SME D). With over 35.7 billion baht ($1.03 billion USD) in guarantees issued in the first 11 months of the 2068 fiscal year, SME D is playing a crucial role in sustaining economic growth and job preservation across the nation. These efforts come as Thailand’s commercial bank lending to SMEs has contracted in recent quarters, prompting new government initiatives-including a 50 billion baht guarantee scheme launched in December-designed to improve access to capital for these vital businesses. SME D is also strategically evolving its support mechanisms for 2069, focusing on expanded digital infrastructure and specialized financial products.
Thailand’s Small and Medium Enterprise Development Corporation (SME D) has provided loan guarantees totaling 35.781 billion baht (approximately $1.03 billion USD) over the first 11 months of its 2068 fiscal year (January-November), facilitating 46.635 billion baht ($1.34 billion USD) in lending through financial institutions. The figures underscore the organization’s commitment to supporting Thai SMEs, a key driver of the nation’s economic growth.
Of the total guarantees, 51% were issued directly through SME D’s programs, while 49% were part of government initiatives. These guarantees have enabled 45,337 SMEs to access credit, preserving 467,249 jobs and generating an estimated economic benefit exceeding 147.776 billion baht ($4.26 billion USD), according to the corporation.
“SME D has been successful in assisting ‘vulnerable’ groups – small business owners, vendors, and freelancers – who often face challenges accessing financing,” said Sittikorn Direksuntorn, Chairman and Managing Director of SME D. “We’ve found that 85% of those assisted are micro SMEs, and we’ve helped 70% of SMEs accessing our guarantees to do so for the first time.”
The PGS 11 “SME D SMEs Sustainable” program, launched in July 2023, has provided 46.147 billion baht ($1.33 billion USD) in guarantees to 66,821 SMEs as of November 30, 2024. A specific component of this program, focused on pickup truck financing under the “Brother Pickup with Warehouse Guarantee” and “Used Brother Pickup with Warehouse Guarantee” initiatives, has facilitated access to 1,662 commercial pickup trucks through 1.106 billion baht ($31.8 million USD) in guarantees.
“For the first time in 34 years, SME D has extended its guarantee coverage to include pickup trucks, helping small businesses, freelancers, farmers, and small transport operators acquire essential work vehicles,” Direksuntorn noted.
Throughout 2068, SME D allocated approximately 3.7 billion baht ($106.7 million USD) in guarantee funds, accepting applications through December 30, 2024. The highest demand for guarantees came from the service sector, accounting for 33.2% of all applications, followed by food and beverage (10.3%) and agriculture (7.9%). These three sectors collectively represented 51% of all guarantees, reflecting growth trends in key domestic industries boosted by economic stimulus measures and increased seasonal investment.
SME D has also successfully assisted SMEs facing debt challenges through the “SME D Ready to Help” program, or the “3-Color” measures (purple, yellow, green). Since the program’s launch in 2022, it has aided 23,664 borrowers with a total outstanding debt of 15.439 billion baht ($446.2 million USD). In the first 11 months of 2068 alone, 5,250 borrowers saw their debt restructured, totaling 3.588 billion baht ($103.1 million USD), and 882 borrowers were able to eliminate their debt entirely – the highest number in the corporation’s 34-year history, with nearly 50% belonging to the vulnerable group and having original principal amounts not exceeding 200,000 baht.
Direksuntorn acknowledged the economic headwinds facing Thai SMEs, particularly liquidity constraints and limited access to capital. Data from the Bank of Thailand shows that commercial bank lending contracted for the fifth consecutive quarter in the third quarter of 2068, falling by 1% year-on-year, driven by a 4% decline in SME lending due to heightened credit risk and structural issues requiring long-term competitiveness improvements.
In response, the Thai government, through the Ministry of Finance, introduced the “SME D Quick Big Win” guarantee scheme on December 2, 2024, allocating 50 billion baht ($1.44 billion USD) in guarantees to rapidly inject liquidity into the SME sector. The scheme comprises three key projects tailored to different SME types:
1. The SMEs Quick LG Guarantee Project, with a 5 billion baht ($144 million USD) guarantee fund, provides guarantees ranging from 100,000 to 100 million baht per borrower, targeting SMEs requiring guarantee letters, such as construction contractors or those bidding on government and state enterprise projects.
2. The SMEs Go Big Guarantee Project, with a 35 billion baht ($1.01 billion USD) fund, offers guarantees from 200,000 to 40 million baht per borrower, supporting general SMEs and small businesses within supply chains seeking loans exceeding 1 million baht.
3. The SMEs Smart Win Guarantee Project, with a 10 billion baht ($288 million USD) fund, provides guarantees from 10,000 to 1 million baht per borrower, focusing on micro SMEs and freelancers needing loans up to 1 million baht. This project incorporates SME D’s Credit Scoring Model and Risk-based Pricing (RBP) to assess customer risk, reduce financial costs, and increase loan approval rates for SMEs with acceptable risk profiles.
“The ‘SME D Quick Big Win’ guarantee scheme is a ‘special measure’ to support SMEs amidst challenging economic conditions, aiming to encourage financial institutions to extend loans by offering high claim payment rates,” Direksuntorn stated. “This absorbs credit cost risk and enhances credit opportunities for both SMEs and financial institutions, reducing loan rejection rates and increasing confidence in SME lending.”
Looking ahead to 2069, SME D plans to elevate its “guarantee mechanism” through four key strategies to transform SME support in Thailand. These include integrating SME D’s TCG Score with relevant agencies, upgrading its 11 branch offices nationwide into “financial hubs” connected to financial institutions via online platforms, developing specialized guarantee products tailored to specific SME segments, and continuing to address debt challenges for vulnerable groups through the “SME D Ready to Help” program, focusing on extended repayment terms, principal reductions of up to 30%, and aligning with the government’s “Close Debt Quickly, Move Forward” initiative.
