SMEs

According to data from the General Statistics Office, as of the end of 2023, Vietnam had approximately 900,000 businesses, of which small and medium-sized enterprises (SMEs) accounted for about 97%, employed 51% of the workforce, and contributed more than 40% to the gross domestic product (GDP).

However, the majority of these businesses are facing difficulties in accessing credit.

Speaking to Nguoi Dua Tin, Mr. Tran Dang Dat, co-founder of Dat Butter Co., Ltd. (Dat Foods; factory in Cu Chi District, Ho Chi Minh City), said that currently, although the Government and commercial banks have implemented many credit support policies to help businesses recover, the issue of accessing capital remains extremely difficult.

“Previously, Dat Foods benefited from preferential loan policies from the Youth Union Fund for businesses, with the stipulation that the founders must be under 35 years old. Now that we are all over 35, the support has been cut off. We are using personal assets as collateral to borrow at normal interest rates, increasing costs for the business,” Mr. Dat said.

The reason for borrowing as an individual instead of as an SME is that the company did not meet the eligibility requirements. Regarding procedures, collateral is needed, including pledged raw materials, proof of financial capacity, and cash flow over the past three years. Having gone through the difficult Covid period, proving the company's financial capacity over the past three years is very challenging.

Therefore, Mr. Tran Dang Dat suggested that banks should consider personalizing loans for each business, considering that SMEs have different revenue figures and varying difficulties. Lending policy is one thing, but the operational system needs to be practical and accurately identify the "pain points" of businesses.

Sharing Mr. Dat's viewpoint, Mr. Nguyen Ngoc Bich – Chairman of Rustic Hospitality Group – stated that currently, when borrowing from banks, banks are generally willing to dedicate time to answering questions and assisting with loan application procedures, providing good support in terms of credit.

The difficulty lies in the fact that loan conditions and general lending policies still require collateral and proof of cash flow through bank statements for the past three years. The financial situation and ongoing projects must also include detailed reports on viable business and financial plans to demonstrate the ability to repay the bank loan.

"Proving cash flow at the present time is very difficult. Because after the Covid period, the economy is struggling, and businesses are in the reinvestment phase, unable to generate profits yet. At the same time, for tourism service businesses like ours, the only collateral is personal assets because service businesses generally don't have assets, only the company brand."

"However, individual borrowers are limited, only able to borrow 70-80% of the appraised value of their assets, and still need to demonstrate their ability to repay the bank. If an asset is valued at around 10 billion VND, according to bank policy, only 6-7 billion VND can be borrowed. Some banks even only lend about 50%, or 5 billion VND. This amount is insufficient for working capital if used for production and business," Mr. Bich said.

The Chairman of Rustic Hospitality Group also revealed that the company had sought other sources of capital from private investment funds, international investors, and financial partners after the Covid-19 period. However, the service and tourism industry was not to the liking of investment funds because they needed industries with less risk, the ability to generate cash flow quickly, and rapid replication, such as the F&B and technology industries, to be able to quickly recover their capital.

According to Mr. Nguyen Tien Manh, Deputy Director of Truong Manh Casting Machinery Co., Ltd., preferential capital support from banks helps the company further boost investment, add more technologies, and produce higher quality products for customers.

However, similar to the aforementioned businesses, the biggest problem for Truong Manh Casting Machinery remains the difficulty in accessing loans due to insufficient assets for collateral. Even if assets exist, their legal status is unclear, and their value as collateral is low. Therefore, they do not meet the lending requirements of credit institutions.

While banks currently lend to SMEs primarily based on the value of collateral, very few unsecured credit lines are available for this customer group.

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