Where to borrow 7% interest rate/year?
Many banks have announced to reduce lending interest rates to as low as 7-8%/year. However, last weekend, the author tried to contact a transaction office of Vietnam Maritime Commercial Joint Stock Bank (MSB) in Ho Chi Minh City and was given detailed instructions on loan applications for production and business activities.
In addition to real estate as collateral, the enterprise must have a 2-year financial report including tax revenue of about 2 - 11 billion VND, a 6-month company account statement (can include the business owner's account), a 4-quarter value-added tax invoice list (tax authority report), 1 or 2 contracts with company partners... If the application is approved, the loan interest rate is 11.5%/year. If borrowing from an individual, it is simpler, only requiring collateral and proof of income, but the loan interest rate for individuals is up to 12.99%/year.
This is a floating interest rate, so after a period of time, the base interest rate will be recalculated plus a margin of 3%, which at this time is equivalent to about 13%/year. "To be more proactive, you should complete the application process early to avoid the situation of the credit limit running out like in 2022, which can return," the bank staff enthusiastically advised.
Businesses still have difficulty borrowing capital and interest rates remain high.
Similarly, a credit officer at TPBank named D. also said that the current lending interest rate for businesses is around 9-10%/year. The bank has also begun to control credit growth again when the growth rate in the first quarter of 2023 was quite high. Therefore, the disbursement time will depend on when the bank's credit limit is still available or not. Answering the question of why there is information that the bank cannot lend while the credit limit is almost full, D. explained: "In addition to lending, a part of the current credit limit is used to handle bonds according to regulations".
When asked if he could access loans with interest rates of 7-8%/year, Mr. Tran Thanh Hai, director of a company in District 6 (HCMC), said: "There is no such interest rate, the company is borrowing from a state-owned commercial bank and it is also 9%/year for a 3-month loan". This interest rate is a reduction of 0.2%/year compared to the beginning of the year. Hearing that the mobilization interest rate has decreased is good, because the loan interest rate will decrease accordingly, but in reality, the reduction in loan interest rate is not much compared to the rate of decrease of mobilization interest rate. Not to mention, according to Mr. Hai, if compared to the 3-month mobilization interest rate that this bank is implementing at 5.4%/year, the loan interest rate is 3.6% higher. This interest rate difference is still too large.
Businesses find it difficult to borrow capital, so they turn to black credit.
Not only is the interest rate of 7-8%/year just a "dream" for many businesses, but even the interest rate of 10%/year is still quite rare. These are even industries that are identified as priority according to Decree 31/2022 dated May 20, 2022 on supporting interest rates of 2% from the state budget.
Mr. Nguyen Ngoc Thanh, Director of Kim Phat Transport Company
Mr. Duong Anh Tuan, Director of Binh Minh LLC, a livestock enterprise in Dong Nai, expressed his frustration that it is still very difficult for enterprises to access capital from banks. At the beginning of the year, all collateral assets were re-evaluated by banks with a reduction of 10-15% and then the lending limit for enterprises was reduced. Therefore, since the beginning of the year, his company has not been able to borrow new loans while the interest rate on the old loan is still 9-11%/year. Although the company is eligible for interest rate support, its application does not meet the requirements because its revenue and profit in the first quarter of 2023 have both decreased sharply compared to last year, while the bank requires them to be equal or higher.
Mr. Tuan said that the reality of the livestock industry is very difficult. Units that are still able to borrow capital do not dare to borrow because with an interest rate of 10%/year, how to make enough profit to pay interest to the bank is a difficult problem. Meanwhile, the cost of raising chickens is currently about 29,000 - 30,000 VND/head but the selling price only fluctuates between 19,000 - 20,000 VND/head, 30% lower. Units that are already in difficulty, lack of money and need to borrow cannot meet the conditions set by the bank. Therefore, the situation of enterprises borrowing money to buy poultry feed and pay workers' salaries is inevitable.
"Bank lending rates have only decreased by 0.5 - 1% compared to the beginning of this year, which is not enough to solve anything, while food and financial costs have increased by 20 - 30%. Businesses that are still eligible do not dare to borrow, so they are not interested in the 2% interest rate support package. There needs to be a deeper support policy, with farmers being able to borrow at lower preferential interest rates, so that borrowers can try their best to overcome difficulties and have a chance to recover; but as it is now, there are countless difficulties," said Mr. Tuan.
Similarly, Mr. Nguyen Ngoc Thanh, Director of Kim Phat Transport Company, said that the company's current interest rate is still nearly 12%/year. If we ask the bank for a new loan, the interest rate will still fluctuate around this level, there is no way it will be lower; but most importantly, it is very difficult to get more disbursement. Since the beginning of the year, the company's collateral has been re-evaluated with a decrease of about 15% compared to the previous year, which means that the company's loan limit has also decreased accordingly because there is no additional collateral.
Furthermore, many banks have unfairly priced lending assets for businesses. For example, banks say that if you borrow to buy a car of Chinese origin, you can only borrow up to 50%, while cars of other countries can still be approved for purchase up to 80-90%. The distinction in asset valuation is causing difficulties for businesses, especially in the transportation industry. "If you can't get a new loan, how can you reach the 2% interest rate support package announced by the government? Each industry has its own characteristics, so credit policies should be more flexible to support businesses to overcome difficult times, but if they continue to apply the old method, no one will be able to access capital," Mr. Thanh said indignantly.
According to VCCI, the rate of enterprises accessing credit has been decreasing recently. The rate of enterprises with loans from banks was 49.4% in 2017, and in 2018 and 2019 it was 45% and 43%, respectively. In 2020, in the context of the Covid-19 pandemic, 42.9% of enterprises still had loans from banks. However, this rate dropped to only 35.4% in 2021 and 17.8% in 2022.
Agreeing, Mr. Pham Van Viet, Vice President of the Ho Chi Minh City Textile, Embroidery and Knitting Association, said that if the lending conditions do not change, the situation of enterprises that cannot borrow will still not be able to borrow. Although the lending interest rate has been reduced by 0.5 - 1% compared to the beginning of this year, small and medium enterprises in this industry still cannot borrow. "Resolving difficulties for enterprises means saving the majority, those that are facing difficulties, not just screening good enterprises that are operating normally. Therefore, credit policies need to change and can be reviewed for each business sector to be more suitable to reality, not applying the same conditions to all fields," Mr. Viet emphasized.
The results of the PCI 2022 survey of 12,000 enterprises announced by the Vietnam Federation of Commerce and Industry (VCCI) in mid-April showed that the biggest difficulty that enterprises are facing is access to credit. Notably, in 2022, access to credit has become the biggest concern for about 55.6% of enterprises, much higher than the figure of 37 - 47% in 2017 - 2021. In case they cannot borrow capital from banks, enterprises still have to find other sources. In which, mainly borrowing from relatives and friends; mobilizing from shareholders, borrowing from other enterprises or mortgaging and selling the enterprise's assets.
Most worryingly, the statistical report shows that up to 12.5% of businesses have had to turn to "black credit" loans, a sharp increase compared to the figure of 4% in 2021. Of course, the interest rate on "black credit" loans is very high, recording an average of about 46.5%/year, about 5.5 times higher than the average annual interest rate of loans from banks.
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