On 22 April 2014, the Ministry of Finance promulgated the Circular No. 47/2014/TT-BTC guiding the implementation of some contents of the Decision No. 03/2011/QD-TTg dated 10 January 2011 of the Prime Minister promulgating the Regulations on loan guarantees for small and medium enterprises ("enterprises") at commercial banks.
The guarantor for the mentioned enterprises' loans as regulated under this Circular is the Vietnam Development Bank ("VDB").
The conditions for granting the above guarantees include: (i) The enterprise's investment project is approved by commercial banks in writing for making loans, and appraised and specified by VDB as a profitable and credit-worthy project; (ii) Having equity capital of at least 15% of total investment capital, invested entirely in fixed assets with sources of equity capital reflected in monthly or quarterly financial report nearest to the time of submission of application for guarantee and commitment on spending the loans for the project; (iii) When applying for the guarantee, the enterprise has no bad debts at any credit institutions or at VDB.
The VDB may guarantee a part or the whole loans of an enterprise at commercial bank but not exceed 85% of the total invested capital of the project, excluding working capital.
In case VDB pays the debt on behalf of the enterprise, the enterprise then must assume the loan to repay VDB with the payment term to be determined by VDB based on business plan and financial situation of enterprise. The interest rate of repayment shall be 150% of the loan interest rate applying for economic organizations as announced by the lender.
This Circular shall take effect on 06 June 2014.