Applying for a bank loan in Thailand is nothing like I have seen anywhere else and is typically Thai, in as much as it is as bureaucratic as it can possibly be! Back in the UK and I guess most countries in the west, I could apply for a loan one day and have it granted the next - at the latest. Even living in Udon Thani I can apply online for a bank loan with my UK bank and have it accepted in under 10 minutes, so why does the process take 6 weeks in Thailand?
The problem in Thailand, as far as I can see, is that most Thai's do not have bank accounts, or if they do they do not use them very much. Everything is bought with cash so any income goes straight in to the pocket, and then spent later. Most Thai's in the Udon Thani area work for themselves, selling food or goods on the streets with very few employed by a company. These means most do not have a regular, reliable income, which banks like to see. The banks therefore have little evidence to go one to determine the risk level of a loan to any individual.
It is highly unlikely that many expats would ever need to consider taking a loan out in Thailand but there may be some who do, or need their wife to take a loan out for whatever reason. So to find out about what happens I asked my wife to apply for a loan, so I could find out what was involved.
The problem in Thailand, as far as I can see, is that most Thai's do not have bank accounts, or if they do they do not use them very much. Everything is bought with cash so any income goes straight in to the pocket, and then spent later. Most Thai's in the Udon Thani area work for themselves, selling food or goods on the streets with very few employed by a company. These means most do not have a regular, reliable income, which banks like to see. The banks therefore have little evidence to go one to determine the risk level of a loan to any individual.
It is highly unlikely that many expats would ever need to consider taking a loan out in Thailand but there may be some who do, or need their wife to take a loan out for whatever reason. So to find out about what happens I asked my wife to apply for a loan, so I could find out what was involved.
Personal Bank Loans
Obtaining a personal loan, for the average Thai in Udon Thani is very difficult. You must provide an ID card, address book and proof of a regular income. unless you can prove you have a regular income, and that your bank account shows that income, you will probably be refused a loan. This income can be from employment, a pension or a combination of the two. You will probably be permitted to borrow up to about 2 million baht depending on your income. If it is the wife applying for the loan, the bank statements (Thai banks only) that show an income from her foreign husband will normally be accepted, even if that account is with a different bank, although they would prefer it to be going to their bank of course.
Business Bank Loans
To apply for a business loan is a little easier but does have a down side. You must provide an ID card, address book, a business that has a government certificate and a copy of your business bank statements for the last 6 months (this period can vary). If the balance on the statements are healthy, you are on your way over the fist hurdle. The downside - loans must be paid over a period of at least 10 years!
Bank Loan Process
The first step is easy enough, well it can be once you find the right person to talk to. You go to the bank and submit an application, however this can only be done when the right person is available in the bank. While anyone in the bank will talk to you about a loan, not everyone in the bank actually knows what they are talking about. This means it will normally take at least two trips to the bank just to submit an application for a bank loan. Finding the right person to talk to might be a bit hit and miss, and you might even need to try a different branch of the bank to find the right person to help you.
Once you have made a successful application you will be asked, at a later date, to provide pictures of the business premises, stock, invoices for goods purchased (no more than 1 year old) and if you trade on the internet, screen shots of your website and any online payment gateway you use to accept payments (i.e. Paypal, Escrow, Moneybookers etc).
If you are married to a Thai and have land, other documentation requested may include your passport, marriage certificate, land registration papers, pictures of your house and land, Even after providing all of this, there is still a chance that a bank representative will want to view the premises for themselves, and take more pictures - including the website and payment gateway pages.
If you do not own or rent a bricks and mortar premises for your business, your application is likely to be refused at this part of process. If your wife runs a small business that operates from a motorbike (as many do), selling coffee, fruit or anything else, the bank is likely to see this as a far higher risk than if she was selling from a proper establishment.
Other than these hurdles it is a case of waiting, waiting and waiting even longer. We completed the process twice (without actually accepting the money) twice to see if the process was consistent and in both cases the process took slightly more than 6 weeks from start to finish. Just why it takes so long remains a mystery and there is no point in asking the bank why as they will not be able to answer the question in a way that makes any sense to you or me.
So, if you ever need to obtain a bank loan in Thailand, it can be done but it is far from straight-forward and my initial advice would be to talk to a bank supervisor or manager first and test the water. Find out exactly what that banks requirements are but even if you appear to meet these requirements, it is not a foregone conclusion that your application will be successful. Good luck should you ever need to apply for a loan in Thailand.
Once you have made a successful application you will be asked, at a later date, to provide pictures of the business premises, stock, invoices for goods purchased (no more than 1 year old) and if you trade on the internet, screen shots of your website and any online payment gateway you use to accept payments (i.e. Paypal, Escrow, Moneybookers etc).
If you are married to a Thai and have land, other documentation requested may include your passport, marriage certificate, land registration papers, pictures of your house and land, Even after providing all of this, there is still a chance that a bank representative will want to view the premises for themselves, and take more pictures - including the website and payment gateway pages.
If you do not own or rent a bricks and mortar premises for your business, your application is likely to be refused at this part of process. If your wife runs a small business that operates from a motorbike (as many do), selling coffee, fruit or anything else, the bank is likely to see this as a far higher risk than if she was selling from a proper establishment.
Other than these hurdles it is a case of waiting, waiting and waiting even longer. We completed the process twice (without actually accepting the money) twice to see if the process was consistent and in both cases the process took slightly more than 6 weeks from start to finish. Just why it takes so long remains a mystery and there is no point in asking the bank why as they will not be able to answer the question in a way that makes any sense to you or me.
So, if you ever need to obtain a bank loan in Thailand, it can be done but it is far from straight-forward and my initial advice would be to talk to a bank supervisor or manager first and test the water. Find out exactly what that banks requirements are but even if you appear to meet these requirements, it is not a foregone conclusion that your application will be successful. Good luck should you ever need to apply for a loan in Thailand.