Thai SMEs urged to leverage Secured Transaction Act for loans

The Thai Commerce Ministry is encouraging small and medium-sized enterprises (SMEs) to capitalise on the Secured Transaction Act. This act allows businesses to use assets with economic value, such as machinery, high-value trees, and intellectual property, as collateral for securing loans.

Deputy Commerce Minister Napintorn Srisunpang made these remarks during the opening of the Business Collateral Fair. The event was designed to support SMEs in accessing funds by leveraging the 2016 Secured Transactions Act.

The act allows various assets to be used as collateral. These include a business itself, a right of claim (which could be a bank account, lease rights, employment contract, sales contract), movable or immovable property used in business operations such as machinery, inventories, raw materials, land, intellectual property, high-value trees (perennial trees), and any other assets as specified in the ministerial regulation.

Lending institutions participating in this initiative offer loans to both existing and new businesses at special interest rates. These institutions include Krungthai Bank, Bangkok Bank, Bank of Ayudhya (Krungsri), Thai Credit Bank, Thai Credit Guarantee Corporation, the Bank for Agriculture and Agricultural Cooperatives, the Small and Medium Enterprise Development Bank of Thailand (SME D Bank), and Export-Import Bank of Thailand (Exim Bank).

The Thai Valuers Association is also involved, in appraising the value of assets that business operators are using as collateral for loans.

Napintorn Srisunpang also witnessed the signing of a memorandum of understanding between several departments. These included the Business Development Department, the Intellectual Property Department, the Marine Department, the Industrial Works Department, and the Land Department.

Core policies

The MOU is intended to provide support for small businesses in the registration of security, including the amendment and cancellation of registration records and making those records public.

The Ministry of Commerce has committed to executing seven core policies aimed at boosting the economy. Key among these are reducing expenses, increasing income, and expanding opportunities for SMEs. The goal is to elevate their GDP contribution from 35.2% to 40% by 2027.

According to the Business Development Department, between July 4, 2016, and March 24, 2024, registered securities amounted to 830,288, valued at 16.6 trillion baht (US$456 billion). This is a significant increase from 36,165 registered securities valued at 128 billion baht (US$3.5 billion) in July 2016, reported Bangkok Post.

In support of the act, Napintorn stated that the act will help boost Thailand’s economic growth as it provides business operators, especially SMEs, with better access to funding sources, helping to increase income for SMEs and their GDP contribution.