Draft Law on Support for Small and Medium EnterprisesThe draft law on support for small and medium enterprises is still awaiting guidance from the Government of Vietnam. The draft law proposes regulations on the content of support for enterprises, notably including support for access to credit at commercial banks and support for access to credit at funds and other financial institutions.
Article table of contents
Support for Access to Credit at Commercial Banks
In credit activities, the State, through organizations and individuals, provides services to support small and medium-sized enterprises (SMEs) by consulting on feasible production and business plans, enhancing management capacity, and ensuring transparency in the enterprise's operations as a basis for accessing loans at commercial banks. Simultaneously, commercial banks conduct lending, discounting, financial leasing, factoring, bank guarantees, and other suitable credit operations according to the scale and characteristics of SMEs. The lending process must be designed to align with the model of SMEs in terms of procedures, rapid capital disbursement, and credit safety assurance.
In particular, the State Bank encourages commercial banks to increase the loan balance ratio for SMEs. If a commercial bank achieves a minimum loan balance ratio for SMEs of 30% or lends to SMEs at preferential interest rates according to development objectives, it will receive support according to the regulations of the Government of Vietnam.
Compared to other enterprise scales, SMEs are prioritized for access to state investment credit and export credit sources to serve the development of production, business, and export markets.
The State Bank builds an interconnected database providing transparent information in compliance with the law for business registration agencies, tax authorities, and credit institutions to lend to SMEs without requiring them to comply with obligations to the state.
Support for Access to Credit at Funds and Other Financial Institutions
In addition to the regulations on credit loans at commercial banks mentioned above, SMEs with feasible production and business plans are eligible for loans from the Small and Medium Enterprise Development Fund.
Accordingly, the state budget ensures a sufficient minimum charter capital for the fund's operation to meet the loan needs of enterprises. Additionally, it can enhance financial capacity for credit guarantee funds through expanding financial advisory and management services to increase the fund's revenues to guarantee loan funding for SMEs at commercial banks.
The State encourages SMEs to voluntarily contribute capital to establish mutual funds as per legal provisions to enhance business capacity and provide financial support for members' production and business activities.
A mutual fund for SMEs is understood as a voluntary, non-profit organization operating for the benefit of capital-contributing members, adhering to legal provisions and the fund's organizational and operational charter. The fund self-funds its operational costs, charges service fees for supporting member services to cover operational expenses. The fund is exempt from income tax for services provided to support members.
The fund serves its members who are SMEs with needs, voluntarily agreeing to the fund's organizational and operational charter. Capital-contributing members are liable within their capital contribution limits.
In addition, the Government of Vietnam encourages the establishment of startup investment funds from capital contributions by investors to invest in startups.
The Draft Law states that startup investment funds raising at least 10 billion VND from private investors are allowed to propose state capital contributions. The State may contribute up to 30% of the total raised capital of the fund. The startup investment fund has the right to repurchase the State's capital contribution in the fund after five years and repay the State all capital contributions with the agreed interest rate.
The advantage for SMEs is priority access to micro-credit services from programs, and micro-finance projects of political organizations, political-social organizations, and non-governmental organizations.
Thus, support for access to credit is one of the key preferential policies of the State for SMEs, helping build trust and motivation for business activities for all enterprises, creating an equal business environment for everyone.
View the full text of the Draft Law supporting SMEs.
