Small scale enterprises face obstacles accessing credit

08/05/2020 06:00 Theo dõi Đầu Tư Tài Chính trên

(ĐTTCO) - Credit support is being offered by commercial banks to support customers in this time of unpredictability and uncertainty due to the Covid-19 pandemic. However, in order to use the resources of the bank, preferential access must meet credit standards. This is the reason why small and medium enterprises (SMEs) are finding it difficult to access credit support from banks.

Small scale enterprises face obstacles accessing credit

Several preferential packages

Mr. Nguyen Quoc Hung, Head of Credit Department of Economic Sectors, specified on exact figures over an online conference that was meant to discuss bank credit to support businesses and individuals to overcome difficulties caused by the outbreak of the Covid-19 pandemic. The amount of VND 62,835 bn has been restructured and kept for debt groups; VND 12,319 bn has been exempted from interest rate reduction and reduction by credit institutions keeping the debt groups; VND 948,407 bn of existing loans will have lowered interest rates, and expected interest income is down VND 3,530 bn; while VND 511,230 bn will be for new loans with preferential interest rates.

These figures also match the scale of support packages announced by commercial banks over past times. Under Directive 11 on urgent solutions to remove difficulties for production and businesses, and ensure social security during the Covid-19 pandemic phase, the Government has announced the deployment of a VND 250,000 bn credit package from capital sources. Commercial banks will also support businesses and individuals impacted by the disease. So far, the total amount of preferential packages launched have reached nearly VND 600,000 bn.

The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) in particular, has provided VND 170,000 bn in credit support, which includes VND 120,000 bn in initial VND 250,000 bn package, two VND 30,000 bn individual support loans upto twelve months, and VND 20,000 bn in medium and long term loans. The Military Commercial Joint Stock Bank (MB) has allocated a total of VND 95,000 bn to support customers, including VND 45,000 bn in loan packages for large and very large enterprises, VND 20,000 bn for SMEs and VND 30,000 bn for individuals. At other commercial banks, credit package support has also been announced to the scale of tens of thousands of billion dong.

Hard to access credit

Speaking with Saigon Investment on the current offer of support packages, an economist commented that the State Bank of Vietnam (SBV) has calculated that so far about VND 2,000,000 bn of the credit balance in the entire system has been affected by the Covid-19 pandemic. While everyone wants to access the support package and the banking industry is trying very hard, the credit support package has increased the capacity to only about VND 600,000 bn, which comprises of restructured loan repayment terms, reduced interest rates, keeping same debt group loans, and the offer of new loans.

For example, the State Capital Management Committee has proposed to groups and corporations to access a credit support package of VND 250,000 bn, a minimum loan period of three years, and an interest rate of 0% to serve capital needs for production activities, businesses and payment to employees. Thus, the support package looks great but it cannot meet all the ground needs. An expert also said that recently many businesses have contacted to find the best solutions to overcome this phase, and have shared the difficulties they are facing when accessing loans. These enterprises are among the SMEs that have all been directly affected by the Covid-19 pandemic.

During the global recession in 2008-2009, concessional loans were offset by interest rate budgets, the consequences of which have not all been resolved. At this time of the Covid-19 pandemic, banks are using their resources to reduce interest rates and share the burden with businesses. For this purpose, banks will tighten some rules and regulations for loans, therefore, SMEs will not find it very easy to access preferential packages.
-Mr. Nguyen Van Than, Chairman of Vietnam Association of SMEs

The SBV has asked credit institutions to share the maximum difficulties with borrowers at this time of uncertainty and unpredictability. Accordingly, banks must reduce operating costs, reduce interest rates, and cut administrative procedures to create maximum conditions for customers to borrow. However, the SBV is unable to ease on credit conditions and lower lending standards because of credit safety and maintaining the health of the bank. For support credit packages, commercial banks remain cautious and are offering new loans only for eligible businesses.

According to a recent survey of the current situation faced by many enterprises, the Vietnam Chamber of Commerce and Industry (VCCI) found that only 85% of enterprises in the group surveyed fell into the market affected by the pandemic in the first three months of the year; 60% of enterprises lacked capital and cash flow; 40% of enterprises lacked raw material supplies; 82% of businesses said that revenue in 2020 would be reduced compared to 2019 if the pandemic is prolonged; and 50% businesses may not survive for more than six months. Enterprises in general are in trouble, and SMEs are in much more difficulties. In such a situation, although banks have launched additional support packages, these are mainly for large businesses. The ability for SMEs to access bank loans is tough as their situation continues to remain uncertain.

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