SCB readies term loans for SMES

Siam Commercial Bank believes the hike in the minimum wage to Bt300 will encourage more small enterprises to seek term loans to improve their production processes, first executive vice president Sutharntip Phisitbuntoon said yesterday.

SCB sees the higher labour costs resulting from the government's measure as an opportunity to approach small and medium-sized enterprises, especially small businesses, with a view to their taking advantage of term loans.

Some customers have already consulted the bank about using fully automated machinery as a means of keeping payroll numbers and costs under control, she said.

SMEs that are in expansion mode are ready to invest in machinery if it can help drive rapid business growth, she said, adding that cash flow alone is generally insufficient to achieve this goal.

SCB facilitates loans at three key stages of the SME life cycle: those businesses at the young stage, that is, start-ups in search of an appropriate business model; those at the growth stage, namely, small firms with an appropriate model in place and an expanding business; and those at the stable stage, that is, firms that are firmly established and about to pass their business on to the next generation.

Sutharntip said the bank would attach more importance to growth businesses by offering quick loans and services.

Mature SMEs, meanwhile, are less likely to need loans but require value services instead, hence it is crucial for the bank to use pricing strategy to attract those seeking financing, she added.

With a smaller overall SME portfolio than other major banks, SCB's main SME focus to date has been on refinancing.

The SME portfolio currently stands at Bt230 billion, with new loans of Bt60 billion targeted for this year. Sixty per cent of the total comprises SME customers refinancing their debt from other financial houses.

Small enterprises with annual sales revenue of no more than Bt75 million are the main refinancing target segment, as such companies want to expand their business and have no worries about external factors such as the European Union sovereign-debt crisis.

The ratio between refinancing and existing customers in the small-business segment is set at 3:1, while for medium-sized businesses it is 1:1, she said.

Although attracting new customers is a top priority, SCB continues to offer benefits to existing business clients, such as unlimited amounts for loans and top-up loans.