Chau Minh Nguyen, deputy chair of the Dong Nai Business Association, said many small and medium enterprises (SMEs) want to borrow money at preferential interest rates to recover production and develop business, but cannot access the loans because of procedural problems.

credit growth rate,Covid-19,preferential loans,vietnam economy



According to Nguyen, many commercial banks still provide loans based on collateral, not feasible business plans. This makes it impossible for SMEs to get loans because the enterprises don’t have assets to mortgage.

In Vinh Phuc, small enterprises all suffered heavily from Covid-19 in the last three months. However, they cannot access the banks’ VND250 trillion preferential credit package because they find it difficult to prove that losses were caused by Covid-19.

Duong Thi Kim Anh, deputy chair of the Vinh Phuc Female Entrepreneur Association, said all the 115 members have been put on tenterhooks as they have to suspend operation, and cannot access loans to resume their activities.

According to the Vietnam Chamber of Commerce and Industry (VCCI,) in normal conditions, SMEs find it difficult to access bank loans. A survey in late 2019 found that the inaccessibility to bank loans was listed as the second largest difficulty for SMEs, after finding clients and other problems, including labor force, market fluctuations and changes in policies.

Around 86 percent of polled SMEs said they could not borrow money from banks if they do not have mortgaged assets and 63 percent said the interest rates and conditions are too difficult. At least 40 percent complained that banks set disadvantageous credit conditions.
 

Around 86 percent of polled SMEs said they could not borrow money from banks if they do not have mortgaged assets and 63 percent said the interest rates and conditions are too difficult. At least 40 percent complained that banks set disadvantageous credit conditions.

Around 44 percent said the required procedures are too complicated and 39 percent said they have to give ‘under-the-table’ money to credit officers to get loans.

It has been even more diffficult to access preferential loans after Covid-19. Banks are hesitating to lend SMEs for fear that SMEs cannot pay debts.

SMEs want banks to simplify the procedures and slash the interest rates to 4-5 percent.

Meanwhile, commercial banks blame SMEs. Enterprises that don’t have assets for mortgage do not allow banks to manage the cash flow and cannot prove the feasibility of their business plans.

A representative of the Yen Bai branch of the State Bank of Vietnam said banks face difficulties when collecting documents and information from clients who are business households and micro businesses. They don’t have standard accounting books so they cannot prove their losses caused by the pandemic.

A senior executive of BIDV Thai Nguyen said that it was more difficult to examine the information and situation of SMEs than that of larger enterprises.

Mai Lan 

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