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Official Gazette

Sunday, June 26, 2022

New rule paves way for SME development

Updated: 16:21’ - 23/05/2019
With a view to strengthening the capacity of small- and medium-sized enterprises (SMEs), the Government on May 10 issued Decree 39, prescribing the establishment and operation of the SME Development Fund.

According to the new regulation, the fund is an off-budget financial fund set up by the Prime Minister. It operates not for profits as a single-member limited liability company of which the State holds 100 percent of charter capital.

A pottery production workshop in Bat Trang traditional craft village, Hanoi__Photo: Minh Quang/VNA

The fund will provides loans to SMEs directly or through the allocation of capital to commercial banks established and operating under Vietnamese law.

As prescribed, innovative SMEs may borrow directly from the fund and are entitled to preferential interest rates equal to 80 percent of the lowest interest rate among those offered by the four major state commercial banks.

However, they are required to satisfy several requirements.

First, they have to meet SME criteria provided in Article 4 of the Law on Support for SMEs, such as having an average number of employees participating in social insurance not exceeding 200 and having a total capital of no more than VND 100 billion or earning total turnover of no more than VND 300 billion in the previous year.

Besides, they must have a feasible production and business project or plan or a new business model; ensure a minimum equity capital equal to 20 percent of the total investment capital of such project or plan; and meet the requirement of loan security prescribed by law.

The maximum loan for each project or production or business plan will not exceed 80 percent of the total investment capital of each project or plan, while the total loan amount of the fund for an SME will not exceed 15 percent of its actual charter capital.

Noticeably, the maximum term of loan must not exceed seven years.- (VLLF)

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