The proper understanding of credit guarantee funds
Updated : Saturday, May 12, 2018 3:52 PM (GMT+0700)

“Creditguarantee funds for SMEs in Phu Yen” has just been launched since the end ofthe year 2017 but so far, lots of enterprises in the province have not fullycomprehended about the fund. These enterprises think the fund will provideloans, however, the reality is not that”.

 
The credit guarantee fund for Phu Yen SMEs creates the favorable conditions for the
enterprises to get access to bank capital more easily. Photo: Processing aqua-culture
products for export at one enterprise in Song Cau town

That is what Mr. Tran Van Anh,Vice director of the Finance Department cum Director of the above-mentionedfund, shared at the recent coffee session with entrepreneurs with the theme“being the companion with Phu Yen credit guarantee funds”.

Mr. Tran Van Anh let known,the credit guarantee fund for SMEs in Phu Yen does not provide loans but worksas the third party to guarantee for the enterprises to obtain bank loans. To beguarantee, first and foremost, the enterprises have to come to the bank andshow their demands of obtaining capital loans; simultaneously being fullyeligible as to the request of the bank, including legitimacy, feasible methodsof producing and trading, being financially competent…but only lack property.After compromising about the credit limit, the interests and the bank hasapproved of the loans, the enterprise will then come to the fund to make therequest of issuing credit guarantee to be fully eligible to sign the guaranteecontract.

As related to this issue,Mr. Ngo Da Tho, chairman of the enterprises’ association, member of themanaging council of the credit  guaranteefund for Phu Yen SMEs, each playground has its own law. For being eligible toreceive the guarantee, the enterprise has to fully meet the requirementsbecause the fund is also one financial organization, operating withindependence and ensuring the capital safety. The fund only “lowers  the standard” a little in comparison with thebanks is that the exemption from requesting enough property. This is exactlythe support of the State for the enterprises to obtain sufficient conditions toget access to bank capital in a more favorable way.

“The province has currentlyabout 800 SMEs that get bank loans with the total debts of about 6,000 billiondons, accounting for 30% of the total debts in the province. This proves thatthe banking system in Phu Yen is opening arms to welcome the SMEs, even thebanks provide credit trustee loans for the SME that have the long-term creditrelationship, with transparent financial state, borrow and return properly.

However, for thenewly-established enterprises, it is difficult to be eligible. The reason isthat the new enterprises, particularly SMEs that have not got the cooperationprocess with the banks, it is impossible for the bank to assess the trusteelevel as well as trading competence.

Therefore, one of theconditions to get loans is to have the property while these new enterpriseslack property,  there must be the thirdparty, who, apart from the credit guarantee fund, the enterprise can askanother stronger  and larger enterpriseor a relative or friend who has greater financial competence, then, the bankcan support”, Mr. Nguyen Van Han, director of state bank, Phu Yen province,said.

According to Mr. Han, creditguarantee fund for Phu Yen SMEs is the great effort of the province. Therefore,the provincial leaders, departments, sectors should orientate which sectors,regions need giving priorities firsts, creating the breakthroughs for thelocalities for the fund as well as the bank to consider giving priorities forguaranteeing and providing loans. The state bank, Phu Yen branch makescommitment to closely cooperate with the funds and give the utmost support forall banks to take part in the cooperation with the credit guarantee fund forPhu Yen SMEs.

Source:Phu Yen Newspaper

Translatedby HAI LOAN

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