Revision of payment periods for small and medium enterprise in Vietnam

Revision of payment periods is one of the risk treatment measures regulated in the Decree No. 39/2019/ND-CP of the Government on organization and operation of SME development fund in Vietnam. According to Article 7 of the Circular No. 14/2020/TT-BKHĐT of the Ministry of Planning and Investment of Vietnam, provisions on revision of payment periods are as follows:

- Eligible borrowers: SMEs facing risks in one of the two 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. 

- Eligibility requirements:

+ An SME has used the 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 for revision of payment periods as follows:

• The application form which is signed by the SME's legal representative and includes the following contents: Causes of risk resulting in its failure to repay debts under the signed contract; capital and asset damage level; outstanding principal and interest payable; adopted risk treatment measures (if any) and proposed risk treatment measures; commitments on the feasibility of the business plan and debt repayment plan after risk treatment;

• Authenticated duplicates of the financial statements audited by independent audit organizations or sent to tax authorities of the latest 02 years before the date of application for risk treatment or of the year preceding the year in which the SME applies for risk treatment if the SME has operated for a period less than 2 years;

• Certified true copy of the debt reconciliation statement by the time of application for risk treatment;

• Other relevant documents (if any).

- The Fund shall prepare a risk treatment dossier, consisting of:

• The application for risk treatment specified in Clause 3 Article 7 of the Circular No. 14/2020/TT-BKHĐT.

• The record of capital and asset damage incurred by the SME.

• The Fund’s report on risk treatment.

• Other relevant documents (if any).

- Authority: The revision of payment periods/amounts shall be considered and decided by the Fund.

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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