Access to credit tough for SMEs

05-Jan-2017 Intellasia | The Saigon Times | 6:00 AM Print This Post

SMEs always find it hard to gain access to credit at banks, according to the Vietnam Association of Small and Medium Enterprises (VINASME).

VINASME statistics showed around 55 percent of SMEs have difficulty accessing various credit support programmes because they lack high-value assets as collateral, use outdated technology, and have low business efficiency.

Moreover, the quality of management and human resources at SMEs is low, with 55.63 percent of SME owners having college education or below. Even those with university education or higher lack necessary knowledge of economics and corporate governance.

They have a limited understanding of legal matters and international business practices.

Tran Buu Long, deputy director of the HCM City Credit Guarantee Fund, said fears of rejection had kept SMEs at bay since the fund requires them to have assets as collateral.

Article 23 of Decision 58/2013/QD-TTg signed by the prime minister provides strict mortgage requirements, Long said. In particular, those seeking assistance from credit guarantee funds must use their existing or future assets as guarantees.

The amount which SMEs in HCM City have not been able to repay is VND90 billion.

Le Thi Kim Xuan, head of the Vietnam Banks Association’s representative office in HCM City, said many SMEs have found their hands tied due to their difficult business situations.

The requirements for SMEs to access credit are stringent, she said.


Category: FinanceAsia

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