14:40 | 28/05/2017 Economy
(VEN) - The Small and Medium Enterprise (SME) Development Fund will offer financial support totaling VND560 billion in 2017. Targeting four groups of SMEs, these programs provide short-term loans at annual interest rates of 5.5 percent, and medium and long-term loans at seven percent.
|SME Development Fund Director Hoang Thi Hong (sitting, left) and VPBank General Director Nguyen Duc Vinh (sitting, right) sign an agreement authorizing the bank to provide loans for SMEs|
The SME Development Fund was established pursuant to a 2013 decision by the prime minister, with total chartered capital of VND2 trillion from the state budget. As soon as it was established, the fund has completely built a legal framework for its operations, including the process by which it provides loans via commercial banks. So far, some 1,000 SMEs have contacted the fund to learn about borrowing procedures.
Data from the SME Development Fund show that last year, the fund and authorized banks provided loans totaling VND250 billion to finance 20 SME projects (VND5-20 billion for each).
According to the director of the fund, Hoang Thi Hong, this year, the fund is prioritizing four groups of SMEs. VND100 billion will be lent to the first group, which includes innovative startups. Companies using advanced technologies or have registered patents for their inventions will be eligible.
The second group includes SMEs in the fields of agriculture, forestry and fisheries. Loans for this group, totaling VND180 billion, will be provided for SMEs which have been operational for at least two years. The third group includes manufacturing and processing SMEs, which will also be provided with loans totaling VND180 billion. VND100 billion will be lent to garbage and wastewater management and treatment firms in the fourth group.
Hoang Thi Hong said this year’s support programs focus on manufacturing SMEs, but not those in the fields of trade and services.
In her opinion, manufacturing SMEs need financial support because they directly create material wealth for society, which is the root of sustainable development.
Facilitating credit access
This year, to facilitate SME access to credit, the fund will continue coordinating with localities, business associations, authorized banks and credit institutions to organize workshops and other activities to provide SMEs with consultancy. The fund will also assist SMEs in all stages from preparing projects to developing them after receiving loans.
Apart from the Ho Chi Minh City Housing Development Bank (HDBank), the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), and the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), the fund has also authorized the Vietnam Prosperity Joint Stock Commercial Bank (VPBank) to provide credit loans for SMEs.
For their part, Hoang Thi Hong said, SMEs should learn about borrowing procedures and prepare their company profiles and financial reports in accordance with fund equirements to get ready for access to loans.