MPI PROPOSES STRICTER REGULATIONS ON PROVISIONS OF LOANS FOR SMES
An enterprise that has already taken out a loan from the Small and Medium Enterprise Development Fund might borrow more money from the Fund to carry out another production and business project, but on the condition that it has paid the principal and interest of the former loan fully and timely.
An enterprise that has already taken out a loan from the Small and Medium Enterprise Development Fund might borrow more money from the Fund to carry out another production and business project, but on the condition that it has paid the principal and interest of the former loan fully and timely.
This regulation is added to a draft decree designed by the Ministry of Planning and Investment (MPI) to revise Decree 39 of 2019 on the organization and operation of the Small and Medium Enterprise Development Fund.
According to the MPI, as the Small and Medium Enterprise Development Fund is established for the purpose of providing support to small- and medium-sized businesses, the more enterprises have access to the Fund’s capital source, the better it is.
Hence, the newly proposed regulation aims to avoid the situation where an enterprise gets multiple low-interest loans from the Fund in the same period, thus restricting bad debt risk and ensuring compliance with the prudence principle in the Fund’s operation. After a borrower repays its loan, its’ subsequent loan application would be considered on the basis of evaluating the previous loan’s efficiency as well as the borrower’s capacity and practical demand.
To make it clearer, the draft decree specifies that subjects entitled to borrow loans from the Small and Medium Enterprise Development Fund are enterprises that are qualified to be recognized as small- or medium-sized innovative startups and have feasible production and business plans.
