More Soft Loan Policies for SMES

To further assist small and medium-sized enterprises (SMEs) to deal with hardships and stabilize business operations and development, in late September 2019, the Government issued Decree 74 on amendments to the Government’s Decree 61 on employment creation policies and national employment fund heads to raise the preferential loan level from the national employment fund for small and medium-sized enterprises, co-operatives, cooperative groups, household businesses and laborers to create jobs, maintain and expand employment.

According to a report of the State Bank of Vietnam in Vinh Phuc, corporate outstanding loans in Vinh Phuc province exceeded VND36 trillion as of October 2019, accounting for nearly 50% of total outstanding loans and more than 10% higher than the end of 2018. Among nearly 3,000 corporate borrowers, over 2,600 customers are SMEs. However, with nearly 7,000 active SMES, over 2,600 borrowers are a modest figure.

According to Decree 74, which was officially effective on November 8, 2019, for production and business establishments, the maximum loan is VND2 billion per project from the previous VND1 billion, not exceeding VND100 million on every full-time employee from the previous VND50 million. The ruling clearly states that security asset is required for loan of from VND100 million. The loan maturity is also increased from no more than 60 months to a maximum of 120 months.