What are direct lending principles of the Small and Medium Enterprise Development Fund from 10/6/2024 in Vietnam?

What are direct lending principles of the Small and Medium Enterprise Development Fund from 10/6/2024 in Vietnam?

Pursuant to Article 15 of the Decree 39/2019/ND-CP (amended by Clause 8 Article 1 of the Decree 45/2024/ND-CP) stipulating direct lending principles of the Small and Medium Enterprise Development Fund:

-  Lending activities of the Fund shall be carried out under agreements between the Fund and small and medium enterprises and must conform to provisions laid down herein.

- Small and medium enterprises borrowing funds from the Fund must ensure the correct use of borrowed funds and repay principal and interest in an adequate and timely manner as agreed upon with the Fund.

- Currency used for lending and debt repayment must be Vietnamese dong.

- Small and medium-sized enterprises that have got loans from the Fund but fully paid off principal and interest amounts on the agreed schedule (except force majeure events) may be eligible to get new loans from the Fund.

What are direct lending principles of the Small and Medium Enterprise Development Fund from 10/6/2024 in Vietnam? - image from internet

What are basic contents of the direct lending agreement between the Fund and Small and Medium Enterprises in Vietnam?

Pursuant to Article 20 of the Decree 39/2019/ND-CP stipulating basic contents of the direct lending agreement between the Fund and Small and Medium Enterprises in Vietnam:

- Information about the Fund’s legal person, small and medium enterprise, location and time of conclusion of the agreement;

- Agreements on lent sum, borrowing purposes, maturity period, lending currency unit, lending method, borrowed fund distribution method, lending interest, transformation of borrowed funds, recovery of lending interest and principal, security for borrowed funds and contingency measures, handling of risks (if any), and effect of the lending agreement;

- Rights, obligations and responsibilities of each party involved in the lending process; method for resolving disputes and discrepancies that may arise during the period of implementation of the lending agreement and other agreements reached to meet the Fund's management requirements.

In addition, contracting parties may agree on other issues as prescribed in the Decree 39/2019/ND-CPand in other relevant laws.

What documents are included in the application documentation for borrowing of the Fund and Small and Medium Enterprises in Vietnam?

Pursuant to Article 19 of the Decree 39/2019/ND-CP stipulating documentation requirements, processes and procedures for direct lending:

Documentation requirements, processes and procedures for direct lending

1. Application documentation for borrowing shall include:

a) Request form for borrowing of fund submitted by small and medium enterprises;

b) Documentation on production and business plan or project, other documents evidencing enterprises eligible for borrowing in accordance with Article 16 herein.

2. Small and medium enterprises shall have to submit application documentation for borrowing of funds at the Fund’s main office or by post.

3. The Fund shall be responsible for receiving and assessing the adequacy of application documentation for borrowing; assessing the feasibility of production and business plan or project and other borrowing requirements as provided herein; making a decision on borrowing and informing small and medium enterprises. In case of rejection, the Fund shall inform applicant in writing and clearly state reasons for such rejection.

4. The Fund shall be responsible for adopting the processes for assessment and making a decision on direct lending according to the principles of ensuring the clear distinction of responsibilities and obligations of individuals and organizations involved in the processes for assessment of and grant of decision on lending.

5. Where necessary, the Members’ Board shall consider making a decision on establishing a Committee to make an assessment before deciding whether lending is accepted or not.

6. The Fund may hire independent consultants or establish an advisory group giving counsel on lending, including scientists, administrators and experts with relevant specializations.

As regulated above, the application documentation for borrowing of the Fund and Small and Medium Enterprises in Vietnam includes:

- Request form for borrowing of fund submitted by small and medium enterprises;

- Documentation on production and business plan or project, other documents evidencing enterprises eligible for borrowing.

Small and medium enterprises shall have to submit application documentation for borrowing of funds at the Fund’s main office or by post. The Fund shall be responsible for adopting the processes for assessment and making a decision on direct lending according to the principles of ensuring the clear distinction of responsibilities and obligations of individuals and organizations involved in the processes for assessment of and grant of decision on lending.

Where necessary, the Members’ Board shall consider making a decision on establishing a Committee to make an assessment before deciding whether lending is accepted or not.

Best regards!