Borrowers eligible for extension of repayment period in Vietnam

“Extension of repayment period” means the agreement made between the Fund and an SME on extension of the repayment period of debts (principal and/or interest) specified in the signed contract. According to Article 8 of the Circular No. 14/2020/TT-BKHĐT of the Ministry of Planning and Investment of Vietnam, eligible borrowers, eligibility requirements, application for extension of repayment period and the authority to decide extension of repayment period are specified as follows:

- Eligible borrowers: SMEs facing risks in the following cases:

+ SMEs suffer financial and/or property damage due to disasters, calamities, crop failure, epidemics, fire, war events or national state of emergency;

+ SMEs incur risks due to objective factors which directly affect their business operations resulting in their inability or failure to repay debts (principal and/or interest) under signed contracts;

+ SMEs have bad debts according to results of debt classification as prescribed in Clause 1 Article 37 of the Decree No. 39/2019/ND-CP and fall into neither the case in Clause 1 nor the case in Clause 2 of this Article.

- Eligibility requirements:

+ An SME has used borrowed funds for the purposes specified in the contract.

+ An SME has difficulties in business operations resulting in its failure to repay debts (principal and/or interest) in full and on schedule under the signed contract.

+ An SME has submitted an adequate application as prescribed in Clause 3 of this Article.

- Application for extension of repayment period: The SME shall prepare an application as prescribed in Clause 3 Article 7 of the Circular No. 14/2020/TT-BKHĐT.

- Dossier on extension of repayment period: The Fund shall prepare a dossier as prescribed in Clause 4 Article 7 of the Circular No. 14/2020/TT-BKHĐT.

- Authority to decide extension of repayment period: The extension of repayment period shall be considered and decided by the Fund.

- Rules for extension of repayment period

+ Repayment period of a debt may be extended multiple times.

+ The extended repayment period must fall within the loan term and not exceed the maximum loan term according to regulations on the Fund’s direct lending.

+ Extension of repayment period: After receiving an adequate application as prescribed in Clause 3 Article 7 of the Circular No. 14/2020/TT-BKHĐT, the Fund shall appraise the received application, carry out risk assessment and determination of capital and asset damage incurred by the SME, issue and organize the implementation of the decision to revise payment periods/amounts.

Therefore, entities eligible for extension of repayment period are SMEs in one of the above-listed cases.

More details at the Circular No. 14/2020/TT-BKHĐT of the Ministry of Planning and Investment of Vietnam, effective from February 25, 2021.

Le Thanh

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