Customers borrow at a VPBank’s office in Khanh Hoa Province (Photo: VNA) Hanoi (VNA) - Inaccessibility to bank loans is one of the main factors that hasprevented private small and medium-sized enterprises (SMEs) from furtherdevelopment, experts said.
Private businesses have made significantdevelopments in all fields, sectors and regions. According to 2016 data fromthe Statistics General Department, the private sector contributed 40 percent ofthe total GDP and generated 51 percent of jobs across the country.
Though the Government, the State Bank of Vietnamand local banks have made efforts and solutions to help private businessesaccess bank loans, there are still troubles for them to receive financialsupport.
“About 70 percent of private businesses cannotaccess bank loans, though there are many policies that allow local banks toincrease their credit growth in the private sector,” said To Hoai Nam,Secretary General of the Vietnam Association of Small and Medium Enterprises atan online conference held on July 27 by the Government portal chinhphu.vn.
SMEs and private companies have to look for otheravailable sources of capital, such as relatives and the black market, whichoffers high interest rates and risks, according to Nam.
Local banks are often cautious considering businessplans of private companies and hardly change their policies to meet businesses’requirements.
On the other hand, private companies are unableto demonstrate the potential outcomes in their borrowing proposals and complywith bank requirements about the standard form of financial reports, and theyoften have low-valuated guaranteed assets.
According to economist Nguyen Minh Phong, thereare a few main reasons that have kept SMEs from obtaining bank loans.
First, private companies do not have long-termbusiness strategies. Therefore, they prefer available financial loans to thosefrom banks.
Secondly, bank lending rates are often higherthan those of other capital sources, and the businesses themselves are notqualified to make loans from banks.
"Local banks need to change their ways ofthinking and have more practical actions in making loans to SMEs," Namsaid.
Local lenders should filter 10 percent of theprivates companies – among the 70 percent of the private companies that havebeen unable to make bank loans – as potential businesses, he said.
Banks should also redesign lending terms to helpprivate companies become able to access loans, he added. “It is important thatbanks make unsecured loans for SMEs and allow them to access the long- andmiddle-term loans.”
Phong said that private companies should mergewith each other to raise their status on the market and make their brands morewell-known so that they are able to receive loans from banks.
Private companies should also look for othersources of capital such as initial public offering (IPO) on the securitiesmarket, he said.
Local banks should improve their risk managementmechanisms and lower their standards for guaranteed assets and unsecured loansfor private companies, especially newly-established firms in the market, Phongsaid.-VNA
VNA
