More and more banks are offering loans to small businesses (Illustrative photo: tuoitre.vn) HCM City (VNA) - Instead of lending to large companies, moreand more banks have started to lend to small businesses to hedge their risks.
At several conferences on credit for enterprises, experts have said that helpingsmall and medium-sized enterprises (SMEs) access bank loans is very important.
However, according to a report by the Vietnam Chamber of Commerce and Industry(VCCI), 85-90 percent of Vietnamese enterprises are small and micro businessesthat face great difficulty in obtaining credit. Only 40 percent of them have infact managed to do so.
Banks are cautious about lending money to SMEs due to a lack of trust in theirability to repay.
Hoang Thu Huong, from HCM City’s BinhThanh district, runs an online shop sellingsweet dessert and bubble tea and two other drinks and fast food shops. Shewants to expand her business but has been unable to borrow from banks, who toldher that her business is small and she has no assets to mortgage.
She has been forced to borrow from other sources at high interest rates.
Small businesses like Huong’s are caught in a vicious circle: they are toosmall for banks to lend, but they cannot get any bigger without bank loans.
Top executives of several banks do not deny this fact, but explained thatthough banks are making big profits, their non-performing loan rates are stillhigh. This was the reason for their reluctance to lend to SMEs, they said.
They said that small and micro businesses cannot seek loans based on theirbusiness performance or financial reports or secure their loans with a🍎sset👍s.
Dao GiaHung, deputy director of the Vietnam Prosperity Bank’s SMEs Division, said“Small businesses are often new in the market, and banks only want to lend tobig businesses which have been around for several years. However, whether ornot the banks lend money to those businesses depends much on their appetite forrisk.”
Recently the State Bank of Vietnam (SBV) urged credit institutions and banks tolend to SMEs.
More and more lenders have announced credit packages for SMEs and microbusinesses.
The An Binh Commercial Joint Stock Bank (ABBank) allows businesses toborrow up to 3 billion VND (132,000 USD) or 10 percent of their annual revenuewithout collateral.
Nguyen Quynh Nga, deputy director of the bank’s SMEs Division, said only bigcompanies can meet the “traditional requirements” like collateral, high growth,and good products to get bank loans.
She said with the new package, ABBank would offer unsecured loans to businessesthat have expanded from household businesses to small enterprises within oneyear, adding that it would practically appraise their business performancerather than by looking at their books.
One of the bank’s reasons for giving more unsecured loansto SMEs is to reduce the big bets it makes on large companies, she added.
PVComBank has also announced a 1.5 trillion VND package with an interest rateof 7.5 percent.
But enterprises have to secure the loans with personal assets such as property,savings accounts or cars.
Small businesses that have expanded within six months after starting ashousehold businesses can also apply for loans.
Nguyen Hoang Minh, deputy director of the SBV’s HCM City Branch, said enhanc🍸ingaccess to unsecured loans would be an effective way to help householdbusinesses expand into enterprises.-VNA
