The SME Development Fund launched financial support programs in 2016

SMEDF was established on April 17, 2013 according to Decision No. 601/QD-TTg of the Prime Minister, with a charter capital of 2,000 billion VND. The Fund will lend capital to SMEs through entrustment to commercial banks. 2016 is the first year of deploying capital lending through entrustment to 03 commercial banks: Vietcombank, BIDV and HDBank. SMEs across the country can choose to borrow capital under 1 of SMEDF's 4 financial support programs this year.

First is the program to support innovation for SMEs with a program limit of 100 billion VND, with a loan amount for each enterprise of 10 billion VND. Next is the program for businesses participating in the chain of production, processing and preservation of agricultural, forestry and fishery products with a limit of 210 billion VND and a maximum loan of 20 billion. Enterprises that produce supporting industrial products for the electronics and mechanical industries also have their own support program, with a limit of 150 billion VND and a maximum loan amount for each enterprise of 25 billion VND. Finally, there is a program to support businesses in the waste and wastewater management and treatment industry with a limit of 100 billion VND, and a maximum loan amount of 25 billion.

Ms. Hoang Thi Hong - Director of SMEDF fund and Mr. Nguyen Quang Ninh - representative of Vietcombank chaired the workshop.

In order to support SMEs to easily access capital for development, the SMEDF loan program is built with many incentives compared to current commercial bank credit loan programs.

Specifically, according to Ms. Hoang Thi Hong, Director of SMEDF Fund, SMEs can borrow with a maximum limit of up to 70% of the total investment capital of the project, production and business plan (excluding working capital) and not exceeding 30 billion VND. Loan term is no more than 10 years (depending on each year's specific financial support program, there will be separate adjustments equal or lower). The entrusted bank is not allowed to request collateral exceeding 100% of the value of the loan. A special feature of this loan policy is that SMEs can use assets formed from loan capital as collateral for the loan. Businesses can proactively repay debt before maturity and are exempt from early repayment fees. Original loan debt can also be deferred for up to 18 or 24 months, depending on the specific program.

SMEDF's interest rate - one of the issues that SMEs are very concerned about when borrowing capital, is also an advantage. At SMEDF, the interest rate is fixed for the loan term and is always lower than commercial loan interest rates. "And during the borrowing process, if commercial loan interest rates decrease, the fund will proactively adjust interest rates to decrease accordingly to ensure the interests of businesses." Ms. Hong affirmed.

According to the assessment of Ms. Dao Thi Kim Ngan, Chairwoman of the Hai Phong Association of SMEs: "The financial support program for businesses of the SMEDF fund at this time is very necessary and meets the expectations of SMEs in accessing loans." However, Ms. Ngan also said that the fund's charter capital of only VND 2,000 billion is too small.

Agreeing with this point of view, Ms. Hong said: "Currently, there are about 500,000 operating businesses in the country, 98% of which are SMEs, so the initial capital of only 2,000 billion VND certainly only meets a very small part of actual needs." In order to increase the fund's capital, the fund is also allowed to mobilize financial support from other domestic and international organizations and units. Recently, SMEDF signed a cooperation agreement with Johnan Shinkin Bank of Japan. "We are currently also in the process of negotiating with a number of other international partners to mobilize capital for the fund." Ms. Hong said.

At the seminar, Mr. Nguyen Quang Minh, Head of International Credit Capital Department of Vietcombank, introduced to SMEs specific ways to access fund capital through Vietcombank.

More than 70 comments from SMEs were given at the Conference. Opinions focus on the issue of determining whether a business is eligible to borrow from the SME Support Fund or not? How to complete loan application? Or will the assets formed in the future of the business be mortgaged?... All questions were answered right at the seminar.

Thu Le – Thanh Son