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State fund offers SMEs preferential loans

Released at: 21:36, 15/05/2019

State fund offers SMEs preferential loans

Photo source: Internet

Loans at rates representing 80% of lowest elsewhere available from SMEs Development Fund.

by Jessica Nguyen

The Vietnamese Government has recently issued Decree No. 39/2019 / ND-CP on the organization and operation of the SMEs Development Fund.

The fund is a non-budget financial fund operating for non-profit purposes and established by the Prime Minister. It is responsible for supporting small and medium-sized enterprises (SMEs) in matters such as lending and financing and in supporting their capacity.

SMEs can borrow directly from the fund and will be entitled to preferential interest rates equal to 80 per cent of the average lowest interest offered by four State commercial banks.

Innovative startup SMEs that can borrow directly from the Fund must meet the following conditions: meet Article No. 4 of the Law on Enterprises (with an average number of employees participating in social insurance not exceeding 200 people, with total capital no more than VND100 billion ($4.3 million) or total revenue no more than VND300 billion ($13 million) or VND12.8 million ($550) in the prior year; ensure that owners’ equity capital in projects and production and business plans reach at least 20 per cent of total investment capital for the implementation; and ensure sufficient capital to implement such production and business projects and plans.

The lowest interest rates are determined on the basis of comparing the rates of the four State commercial banks with the largest total assets at the time of determining such interest rates.

The maximum amount for each project or production or business plan must not exceed 80 per cent of the total investment, and the total amount for any one SME must not exceed 15 per cent of the Fund’s charter capital.

The Fund is also allowed to make indirect loans to SMEs through the allocation of capital to certain commercial banks.

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