The state-owned Small and Medium Enterprise Development Bank of Thailand (SME Bank) plans to provide low-interest factoring financing worth 7 billion baht to improve the liquidity of small business operators.
Small and medium-sized enterprises (SMEs) can sell their accounts receivable incurred from the sales of products and services to public agencies, state enterprises, state universities, local administrative organisations, public organisations, and SET and MAI-listed companies to SME Bank, which will charge them an interest rate of 3.99%, said Somchai Harnhiran, the bank's board chairman.
Those with accounts receivable whose debtors are in the private sector can convert them into cash at SME Bank with an interest rate of 4.99%, he said.
The factoring service will be available at the state-run bank until the end of 2017.
The bank buys accounts receivable at a maximum 90% of the value of the outstanding receivables, Mr Somchai said. He said the balance for accounts receivable are able to be sold to SME Bank and must range from 10,000 baht to 15 million.
With the factoring service, SME operators can convert accounts receivable into cash immediately without having to wait for an invoice's due date, so their financial liquidity can be boosted rapidly, helping to sharpen their competitive edge.
SME Bank managed to offer 1.59 billion baht worth of refinancing via its factoring scheme offered from September to December last year. The amount increased by 9% from the previous year's scheme.
Last year SME Bank provided 34 billion baht worth of new loans and reduced its non-performing loans (NPLs) to less than 18 billion. It posted a net profit of 1.6 billion baht in 2016, thanks largely to reducing bad loans and extending new loans as targeted.
The bank is among seven state enterprises currently under rehabilitation. The others are Thai Airways International, the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc, CAT Telecom and the Islamic Bank of Thailand.
The bank suffered a net loss of 4.03 billion baht in 2012 before swinging to a net profits of 396 million in 2013, 176 million in 2014 and 1.24 billion in 2015.
This year, SME Bank has been assigned to extend a maximum of 30 billion baht in new loans and cut NPLs to 16.6 billion.