Business households in disadvantaged areas eligible for a loan of up to 100 million VND in Vietnam

Business households in disadvantaged areas eligible for a loan of up to 100 million VND in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Identifying disadvantaged areas entitled to credit policies for business households in Vietnam

According to Article 2 of Decision 31/2007/QD-TTg amended in Decision 17/2023/QD-TTg on difficult areas, as follows:

- Difficult areas entitled to credit policies for production and business households specified in Decision 17/2023/QD-TTg include:

+ Communes, wards, and townships (hereinafter collectively referred to as communes) specified in the List of commune-level administrative units in disadvantaged areas promulgated by the Prime Minister for each period;

+ The island districts do not have commune-level administrative units but belong to the List of communes with special difficulties in the flatlands, coastal areas, and islands promulgated by the Prime Minister for each period;

+ Villages not belonging to the communes specified at Point a, Clause 1, but on the List of villages with special difficulties in ethnic minority and mountainous areas promulgated by competent authorities for each period.

- Administrative units established on the basis of division, separation, or merger of administrative units on the lists mentioned in Clause 1, Article 2 ofDecision 31/2007/QD-TTg amended in Decision 17/2023/QD-TTg are also entitled to credit policies under Decision 17/2023/QD-TTg.

2. Who is eligible for a loan in disadvantaged areas in Vietnam?

According to Article 3 of Decision 31/2007/QD-TTg amended in Decision 17/2023/QD-TTg, borrowers in disadvantaged areas are: households as prescribed by law (including farm households) conducting production and business activities in areas not prohibited by law in disadvantaged areas in accordance with regulations and meeting the conditions for borrowing capital as prescribed.

3. Conditions for business loans for households in disadvantaged areas in Vietnam

Decision 17/2023/QD-TTg also added loan conditions.

According to new regulations, stipulated in Article 4 of Decision 17/2023/QD-TTg, borrowers must ensure the following conditions:

- The borrower must have a production and business project or plan certified by the People's Committee of the commune where the project is implemented or the production and business plan.

- Borrowers must have full civil act capacity.

- The borrower legally resides in the place where the project, production, and business plan are implemented.

- Borrowers are not classified as poor households, near-poor households, or households that have just escaped poverty, according to the Prime Minister's Decision.

- Borrowers do not have outstanding loans at the Bank for Social Policies for the following programs:

+ Loan program to support job creation, job maintenance, and expansion in accordance with the law on job creation support policies and the National Employment Fund;

+ Program for investment loans and support for the development of precious medicinal herb growing areas according to the provisions of law on preferential credit policies for the implementation of the National Target Program on socio-economic development in ethnic minority and mountainous areas in the period from 2021 to 2030, phase 1: from 2021 to 2025 and amendments, supplements, and replacement documents (if any).

+ Other credit and loan programs for households to carry out production and business activities as prescribed by law (if any).

4. Loan capital for businesses for households in disadvantaged areas in Vietnam

According to the provisions of Article 7 of Decision 31/2007/QD-TTg amended in Decision 17/2023/QD-TTg, the loan amount for businesses for households in specific difficult areas is 100 million VND/person.

Previously, according to the old regulations, the maximum loan amount for a production and business household was 30 million VND.

Loan interest rates for households in disadvantaged areas in Vietnam

Loan interest rates for households in disadvantaged areas specified in Article 8 of Decision 31/2007/QD-TTg amended in Decision 17/2023/QD-TTg are as follows:

- Loan interest rate is 9%/year.

- Overdue debt interest rates are equal to 130% of loan interest rates.

- The adjustment of the lending interest rate shall be decided by the Prime Minister in each period on the basis of the proposal of the Board of Directors of the Bank for Social Policies.

- The loan interest rate ensures the principle of offsetting the average interest rate of capital sources and management fees for this Program. In which, the average interest rate of capital sources and management fee are determined according to the guidance of the Ministry of Finance on financial management regulations applicable to the Bank for Social Policies.

Nguyen Ngoc Que Anh

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