As the year is coming to an end, credit needs of enterprises, especially credit lines for low-cost expenditures and commodity importation increase. In the meantime, small and medium enterprises share the same characteristics of size and backing assets for mortgage; thus, failing the create trust with banks for loans. Knowing this, banks are offered special promotions to dissolve their worries.
Capital accessibility
In Binh Duong, the number of small, medium and small enterprises are accounted for 98% of the total number of enterprises in the province. The group has been identified as a growth engine and a major contributor to the province's economy thanks to their high labor content. However, this object often encounters many difficulties in accessing business conditions such as market, production space, labor attraction and especially loans. By the end of June 2017, the total outstanding loans in the province reached 141.636 trillion dong, up 15.85% over the same period of 2016, according to statistics of the State Bank of Binh Duong Branch. Of this total, outstanding loans to SMEs were amounted to VND28,885 billion, with 2,212 loans from agriculture, forestry and fisheries, industry and construction, and trade and services. Thus, only about 40% of these enterprises have access to bank funding.
BIDV extend preferential offers to small and medium enterprises. Photo: Thanh Hong
Muoi Nut, a lacqure enterprise owner of Hiep Cong Exporting Lacquer at Tuong Binh Hiep Ward in Thu Dau Mot City informed that purchase orders have been multiplied in his establishment, prompting him to purchase more equipment and materials for production; however, he is facing the barrier of loans.
“We are in a loop of wishes and loans as we could never get access to the loans to expand our business,” said Muoi.
An unnamed metallurgy enterprise in Tan Uyen Town has been affirmed of production expansion needs out of its current charter capital of VND 10 billion. The new production line for its production boost is valued at EUR 3 up to 4 million, putting it in dilemma.
“We have no other way than to roll up and turn things over and lose many opportunities,” said its unnamed employee.
Doors open for small and medium enterprises
In Binh Duong, there are many supporting channels for small and medium enterprises such as Investment and Development Fund, Binh Duong Cooperative Development Fund, and Binh Duong Science and Technology Development Fund. However, in reality, those enterprises of small and medium sizes could never enjoy these incentives due to financial constraints and failure to meet the requirements in terms of collateral as well as feasible business plans. In order to maintain its operation, many small- and medium-sized business owners tend to borrow credit from financial and personal credit companies for business purposes. With this facility, it is easier for entities to get through without due process documentation. However, this approach means that the business suffers when the loan is not included in operating expenses, deducted income and even borrows at high interest rates on an individual basis.
Understanding the difficulties of businesses, many banks such as Viet Bank, Vietinbank, BIDV ... have launched credit packages dedicated to this object. Specifically, Ban Viet Bank is implementing the product "Supplementing business capital for business customers" with the lending rate up to 100% of the value of collateral. In addition, Ban Viet supports preferential interest rate of 1% / year compared to the normal interest rate. Not to mention, this bank also applies flexible conditions for business customers for 3 years or more. Accordingly, the enterprise can apply the competitive interest rate over the market level of 1.5% per annum and the loan ratio up to 100% of the value of the security assets.
With a broader level of support, BIDV and the Vietnam Small and Medium Enterprises (VINASME) have signed a comprehensive cooperation agreement to support and develop small and medium enterprises, such as Coordinated to assist VINASME in developing projects related to SME development by the Government. Specifically, the Scheme on supporting business households to be transformed into enterprises and the Scheme on solutions to associate and promote big enterprises and foreign enterprises to support small and medium enterprises participating in the domestic and international value chain.
Reported by Thanh Hong – Translated by Vi Bao
