Mortgage requirements stand between small companies and bank loans
Small- and medium-sized enterprises (SMEs) are unable to borrow from banks because they do not have property to mortgage, Tran Viet Anh, Vice Chairman of the HCM City Business Association, has said.
Small enterprises complain at a conference in HCM City that it is difficult for them to get bank loans because of stiff mortgage conditions.(Photo: VNA)
HCM City (VNS/VNA) - Small- and medium-sizedenterprises (SMEs) are unable to borrow from banks because they do not haveproperty to mortgage, Tran Viet Anh, Vice Chairman of the HCM City Business Association,has said.
He was speaking at a conference held to bring togetherenterprises and banks in Ho Chi Minh City this week, where many SMEs in thecity complained about their difficulty in getting bank loans.
Nguyen Van Hau, financial manager of Dai Dung Company,said in fact the enterprises need to mortgage a lot of assets to borrow becausebanks value properties at a fraction of their market price.
“If an enterprise want to borrow 100 billion VND, itmust have properties worth 300-400 billion VND,” Hau said.
Most manufacturing companies tended to rent or buylands in industrial parks, but banks did not accept them as collateralsince they are not granted land use right certificates, he said.
Lu Nguyen Xuan Vu of Xuan Nguyen Group, a companyoperating in the agricultural sector, said firms in the sector mainly havefarmlands, and they are valued far lower than others.
Agricultural firms find it even harder to get bankloans than those in other sectors, he added.
Anh from the HCM City Business Association said banksshould increase the rate of unsecured loans for SMEs.
Dao Minh Tu, Deputy Governor of the State Bank of Vietnam,said the banks and businesses should work together to find a way out.
The central bank would consider relaxing lendingrequirements so that SMEs can get easier access to bank loans, he promised.
It would also increase loans for production andbusiness activities, especially in priority sectors, simplify lendingprocedures and diversify banking products, he said.
Meanwhile, banks should offer lower interest rates andshare businesses’ risks, Tu said.
A report from the SBV shows that credit to SMEs hasedged up this year.
In the first quarter, loans outstanding to SMEsincreased by 2.8 percent to 1.31 trillion VND (56.2 million USD),accounting for 18 percent of total loans.-VNS/VNA
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Small enterprises complain at a conference in HCM City that it is difficult for them to get bank loans because of stiff mortgage conditions.(Photo: VNA) 
