After nearly eight years of operation, the Can Tho Credit Guarantee Fund for Small and Medium-sized Enterprises (CCGF) has guaranteed over 170 businesses to borrow VND570 billion. Guaranteed businesses have fulfilled their debt repayment obligations to commercial banks. As a result, CCGF has preserved and developed its VND100 billion and has not ever used it to pay debts to credit institutions.
Mr. Nguyen Huu Phuoc, Director of CCGF, said, during its operation, CCGF has a favorable, relatively complete legal corridor for credit guarantee, especially after Law 04/ 2017/QH14 on Enterprise Support dated June 21, 2017 of the National Assembly and Decree 34/2018/ND-CP dated March 8, 2018 of the Government, while more companies are accessing CCGF services.
However, Decree 34/2018/ND-CP, which replaced Decision 58/2013/QD-TTg on conditions for businesses to access credit guarantee, has some hard requirements: Having an investment project, effective production and business plan, feasible loan repayment plan; having investment projects and business plans appraised and guaranteed by the Credit Guarantee Fund; and having a plan on at least 20% of the equity in participating in investment projects and business plans.
Therefore, CCGF recommends adjusting and supplementing some contents in Decree 34/2018/ND-CP. Specifically, there is no requirement for having collateral for a credit guarantee. Guarantee funds can decide security measures for loan certificates for each specific enterprise and project. Moreover, support is necessarily substantive. The decree needs to clearly stipulate that guaranteed loans carry lower interest rates than ordinary commercial loans.
The guarantee by credit guarantee funds is only one condition. Businesses need to meet a lot of other conditions from banks that are not interested in guarantees by such funds because of their small capital size, much smaller than bank loan packages. Therefore, CCGF hopes to have its registered capital increased to meet guarantee needs and bring funds to more SMEs.
Source: Vietnam Business Forum