How to obtain money for your business in Thailand

How to obtain financing for your business in Thailand

The Thai cabinet recently announced the approval of the draft Royal Decree regarding income tax exemption for investment in Thai startups.

This amendment was issued under the Thai Revenue Code and can be applied to cases where the funding for a startup has come either directly or indirectly through Venture Capitalists (VC), Corporate Venture Capitalists (CVC), or private equity financing or trusts (PE Trust).

What qualifies as a startup?

In order for an investment in a startup to qualify for the capital gains tax waiver, the startup must engage in the target activities approved by the Committee on Policy for National Competitive Enhancement for Targeted Industries. These specific industries must use technology as the basis for their production process.

As it stands, there are 12 targeted industries established by the Notification of the Committee on Policy for National Competitive Enhancement for Targeted Industries No. 1/2561. These targeted industries have been divided into 3 groups:

  • 5 S-Curve industries: Next-generation Automotive, Smart Electronics, Affluent, Medical and Wellness Tourism, Agriculture and Biotechnology, and Food for the Future;
  • 5 New S-Curve industries: Robotics, Aviation and Logistics, Biofuels and Biochemicals, Digital, and Medical Hub; and
  • Additional industries: Defense and Education and Human Resources Development.

Understand Local Business Environment:

  • Familiarize yourself with the local business regulations, market trends, and economic conditions in Thailand.
  • Consider seeking advice from local business associations, chambers of commerce, or legal advisors to understand the specific requirements and challenges.

Develop a Business Plan:

  • Create a comprehensive business plan that outlines your business model, market analysis, financial projections, and funding needs.
  • A well-prepared business plan will be crucial when approaching potential lenders or investors.

Identify Financing Options:

  • Commercial Banks: Traditional banks are a common source of business financing. Approach local banks and present your business plan to secure  business loan.
  • Government Programs: Explore government-backed financing programs designed to support small and medium-sized enterprises (SMEs). The Thailand Board of Investment (BOI) and the Small and Medium Enterprise Development Bank of Thailand (SME Bank) are potential resources.
  • Venture Capital and Private Equity: If your business has high growth potential, consider seeking investment from venture capital or private equity firms.
  • Angel Investors: Look for individual investors, known as angel investors, who may be interested in supporting startups and small businesses.
  • Crowdfunding: Consider online crowdfunding platforms to raise funds from a broader audience. Ensure compliance with any regulatory requirements for crowdfunding in Thailand.

Comply with Regulatory Requirements:

  • Ensure that your business complies with all legal and regulatory requirements for obtaining financing. This may include business registration, licensing, and adherence to financial regulations.

Build Relationships:

  • Networking is crucial in Thailand. Attend industry events, join business associations, and connect with potential investors, bankers, and other entrepreneurs.

Collateral and Guarantees:

  • Be prepared to provide collateral or personal guarantees, as this is often a requirement for business loans in Thailand.

Creditworthiness:

  • Maintain a good credit history for yourself and your business. Lenders will assess your creditworthiness before extending financing.

Negotiate Terms:

  • When negotiating financing terms, be clear about the purpose of the funds, the repayment schedule, and any associated interest rates or fees.

Professional Advice:

  • Seek advice from financial advisors, legal experts, and consultants who specialize in business finance in Thailand.

Stay Informed:

  • Stay informed about changes in the financial landscape and government policies that may impact business financing in Thailand.

Remember that the specific requirements and processes may vary, and it’s essential to conduct thorough research and seek professional advice tailored to your business situation.

How can our experts help you invest in a startup in Thailand?

For further information about how our team can assist you prepare for the arrival of this new legislation or any other matters relating to startup tax benefits, please feel free to book a consultation here.

Let the Startup Specialists  handhold you for doing business in Thailand.

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