Amending and supplementing conditions for borrowing capital from the Small and Medium Enterprise Development Fund

The Government has just issued Decree 45/2024/ND-CP amending and supplementing a number of articles of Decree No. 39/2019/ND-CP dated May 10, 2019 on the organization and operation of the Small and Medium Enterprise Development Fund.

Illustration photo. (Source: Internet)

Lending principles

Regarding the principle of direct lending of the Small and Medium Enterprise Development Fund (Fund), Article 15 of Decree No. 39/2019/ND-CP stipulates:

1. The Fund's lending activities are carried out according to the agreement between the Fund and small and medium enterprises, in accordance with the provisions of this Decree.

2. Small and medium enterprises borrowing capital from the Fund must ensure that they use the loan for the right purpose and repay the principal and interest in full and on time as agreed with the Fund.

3. The currency for lending and repayment is Vietnamese Dong.

In addition to the above 3 principles, Decree 45/2024/ND-CP adds the following principle: Enterprises that have borrowed capital from the Fund will be considered for loans for new projects and production and business plans from the Fund's capital if the enterprise has fully repaid the principal and interest of the loan in full and on time.

This principle aims to limit a business from borrowing capital for many projects and production and business plans at the same time. At the same time, after the business has fully paid back, there will be enough basis to evaluate the results, efficiency, ability and real need for support next time.

Amendment and supplement of loan conditions

In addition, Decree 45/2024/ND-CP also amends and supplements Clauses 1, 2, 3, Article 16 on loan conditions. Accordingly:

1. Small and medium-sized innovative startups can borrow capital from the Fund when meeting the following conditions:

a) Meet the criteria for innovative start-up small and medium enterprises as prescribed in the Law on Support for Small and Medium Enterprises and its implementing guidelines;

b) Have a feasible production and business project and plan that meets the criteria for identifying innovative start-up small and medium enterprises.

c) Ensure that the owner's equity capital participating in the project, production and business plan is at least 20% of the total investment capital to implement the project, production and business plan and must ensure sufficient capital to implement the project, production and business plan;

d) Satisfy the regulations on loan guarantees as prescribed in this Decree.

2. Small and medium enterprises participating in industry clusters can borrow capital from the Fund when meeting the following conditions:

a) Participate in industry clusters as prescribed in the Law on Support for Small and Medium Enterprises and its implementing documents;

b) Have feasible production and business projects and plans in the industry and field of the industry cluster;

c) Satisfy the provisions at Point c and Point d, Clause 1 of this Article.

3. Small and medium enterprises participating in the value chain can borrow capital from the Fund when meeting the following conditions:

a) Participate in the value chain as prescribed in the Law on Support for Small and Medium Enterprises and its implementing documents;

b) Have a feasible production and business project and plan and have products in the value chain;

c) Satisfy the provisions at Point c and Point d, Clause 1 of this Article.

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