Government to fund smaller enterprises

Small- and medium-sized enterprises (SMEs) can now get loans at preferential interest rates from a fund operated by the Ministry of Planning and Investment, a recent meeting heard in Ho Chi Minh City.

Hoang Thi Hong, Chairwoman of the Small and Medium Enterprise Development Fund (SMEDF), said the fund began functioning last April and has identified three lenders, Vietcombank, BIDV and HDBank, through which to lend to SMEs.

They have started to receive applications for loans, she said.

Hong said the fund’s main aim is to minimize mortgage requirements.

Bui Hoang Tung of SMEDF’s monitoring and risk management division said SMEs need to otherwise fulfill a number of conditions, including having feasible production or business plans in prioritized areas.

Workers make bicycle frames at a small-sized enterprise in Thai Binh province.
Workers make bicycle frames at a small-sized enterprise in Thai Binh province.

The maximum loan is 70 percent of fixed cost – it does not provide working capital - and must be repaid within seven years. Borrowers can prepay the loans without penalties.

Tung said the fund has four lending programs.

SMEs working in innovation and creativity are entitled to loans of up to VND 10 billion (USD 448,430), he said.

The limits for supporting businesses in agro-forestry-fisheries and electronics and mechanical engineering are VND 20 billion and VND 25 billion, while SMEs operating in wastewater treatment can borrow up toVND 25 billion, he said.

The loans carry a fix interest rate of 7 percent, he added.

Hong said apart from VND 2 trillion provided by the Government, SMEDF would also source capital from the private sector to increase its corpus.

Tô Hoài Nam, deputy President of the Associations of Small and Medium Enterprises, said there are more than 500,000 SMEs in the country, accounting for more than 90 percent of all companies.

They face difficulties due to limited competitiveness and funding, but the fund is expected to provide them with new opportunities, he said.

VNA

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