From February 25 and on, small and medium enterprises (SMEs) will follow Decision No. 03/2011/QD-TTg on guaranteed loans, ruling that Vietnam Development Bank (VDB) will guarantee loans of SMEs indebted to commercial banks. Controlling institutions will be VDB, commercial banks, and SMEs legally and duly related to loans guarantee regulations
Subjects applicable to loans guarantee are ruled under Decree No. 56/2009/ND-CP dated June 30. 2009 on assistance to the development of SMEs. VDB will guarantee medium and long term loans in fields of agriculture, forestry, maritime products, processing industry, manufacturing, combustion gas, hot water, steam, air conditioning, water supplying, waste treatment, construction, machine and vehicle repairing, transportation, and logistics.
SMEs should ensure the following conditions to be guaranteed with loans:
- Belonging to the named subjects;
- Having effective investment projects;
- Being creditworthy;
- Having investigated and agreed to be guaranteed by VDB;
- Having 15% owner’s equity at the minimum and no bad debts to credit organizations.
As for loans guarantee scope, VDB will guarantee at maximum 85% of loans on basis of project investigation and creditworthy parties. VDB is responsible of guaranteeing principal and interest emerged from loans at commercial banks.
The limitation is that guaranteed loans do not exceed 5% of and 5 times of net charter capital of VDB.
Bank charges for loans guarantee include VND 500,000 for dossier and annual 0.5% guarantee loans. Per bank charge, 75% of the amount will be established as fund against risks and 25% collected to income of VDB.
Article 17 of the regulations requires VDB to sign guarantee contract, to issue guarantee certificate, modification, supplementation, extension or elimination of guarantee upon changes of credit contract. VDB is also required to committee guarantee contracts and observe the laws upon disputes and lawsuits. VDB refuses loan guarantee in cases:
- Upon clear verification of commercial bank leading to loans retrieval and enterprises fail to pay fully on due date.
- Within 7 days after due date, commercial bank will advise VDB in writing provided that enterprises fail to pay fully on due date.
- After receving request for guarantee, within 30 days, VDB will join commercial bank in retrieving loans and committed loans guarantee as ruled by agreements and dossiers.
The regulations also detail payment methods as well as assets processing and right to file lawsuits against enterprises.
Reported by Nguyen Hong Phuc – Translated by Vi Bao
