SME Business

According to the General Statistics Office, by the end of 2023, Vietnam currently has about 900,000 enterprises, of which small and medium enterprises (SMEs) account for about 97%, employ 51% of the workforce and contribute more than 40% to the value of gross domestic product (GDP).

However, most of these businesses are having difficulty accessing credit capital.

Sharing with Nguoi Dua Tin, Mr. Tran Dang Dat, co-founder of Dat Butter Company Limited (Dat Foods; factory in Cu Chi district, Ho Chi Minh City) said that currently, although the Government and commercial banks have many credit support policies to help businesses recover, the story of accessing capital is still "difficult on all sides".

“Previously, Dat Foods enjoyed preferential policies on loans from the Youth Union Fund for businesses with the regulation that the founders must be under 35 years old. Now we are all over 35, so the support source has been interrupted. We are using personal assets as collateral to borrow at the normal interest rate, increasing costs for the business,” said Mr. Dat.

The reason for borrowing from individuals instead of borrowing as an SME is that the business does not meet the requirements for borrowing. Regarding procedures, it is necessary to have collateral, mortgaged raw materials, and prove financial capacity and cash flow in the past 3 years. After going through the difficult Covid period, it is very difficult to prove the financial capacity of the company in the past 3 years.

Therefore, Mr. Tran Dang Dat suggested that banks can consider and personalize loans for each business, SME business but how much revenue, each business has different difficulties. Lending policy is one thing, the operating system needs to be put into practice, correctly recognizing the "pain" of the business or not is another thing.

Sharing the same opinion with Mr. Dat, Mr. Nguyen Ngoc Bich - Chairman of Rustic Hospitality Group informed that currently, when borrowing capital from banks, basically, banks are willing to spend time answering and supporting loan procedures, and providing good support in the credit section.

The difficulty lies in the lending conditions and general policies for borrowing capital, which still require collateral and proof of cash flow through bank statements for the past 3 years. The financial situation and ongoing projects must also have specific reports on business plans and positive financial plans to demonstrate the ability to repay bank loans.

“It is very difficult to prove cash flow at the present time. Because after the Covid period, the economy is difficult, businesses are in the reinvestment phase, and cannot make a profit yet. At the same time, for tourism service businesses like us, the only collateral is personal assets because service businesses have almost no assets, only the company brand.

However, individuals cannot borrow much, they can only borrow 70-80% of the appraised assets and still have to prove their ability to repay the bank. If the asset is valued at about 10 billion VND, according to bank policy, they can only borrow 6-7 billion VND. Some banks even only lend about 50%, which is 5 billion VND. If the above amount is used for production and business, it is not enough for working capital," said Mr. Bich.

The Chairman of Rustic Hospitality Group also confided that the company has also sought other sources of capital from private investment funds, international investment, and financial partners after the Covid-19 period. However, the service and tourism industries are not the taste of investment funds because they need industries with low risk, the ability to create fast cash flow, and fast replication such as F&B, technology, etc. to be able to quickly recover capital.

Deputy Director of Truong Manh Casting Mechanical Company Limited, Mr. Nguyen Tien Manh, said that preferential capital support from banks helps the company to further increase investment, add technology, and make better quality products for customers.

However, similar to the above enterprises, the biggest problem for Truong Manh Casting Mechanics is still the difficulty in accessing loans due to the lack of assets to mortgage. If there are assets, the legality is still unclear, the security value is low. Therefore, it does not meet the lending conditions of credit institutions.

While banks currently lend to SMEs mainly based on the value of collateral, very few unsecured credit limits are available to this group of customers.

Source: https://www.nguoiduatin.vn/e-vong-luan-quan-cua-doanh-nghiep-sme-khi-vay-von-ngan-hang-a669272.html