On May 10, 2019, the Government issued Decree No. 39/2019/ND-CP regulating the organization and operation of the Small and Medium-sized Enterprise Development Fund (hereinafter referred to as the Fund). One of the important contents is allowing innovative start-up SMEs to borrow capital from the Fund with a maximum term of 7 years if they meet all the conditions as stipulated, effective from July 1, 2019.
The conditions required for SEM to be eligible for a 7-year loan are as follows:
One isEnterprises must have total capital not exceeding 100 billion VND; and total revenue in the preceding year not exceeding 300 billion VND (based on the Law on Support for Small and Medium-Sized Enterprises 2017).
SecondlyThe business owner must have at least 20% of the total investment capital for the project or business plan.
Third isThe enterprise has a feasible production or business project or plan;
Four isBusinesses must meet the requirements for loan collateral.
Year isIt is necessary to ensure sufficient capital is available to implement the project/production and business plan.
In cases where SME production and business projects or plans have already received loans from commercial banks before this Decree takes effect, through the entrusted fund, they may continue to be implemented according to the agreements signed in accordance with Decision No. 601/QD-TTg dated April 17, 2013 of the Prime Minister on the establishment of the SME Development Fund until the end of the entrusted lending period.
Meanwhile, the SME Development Fund will continue to apply the current accounting regulations for local development investment funds until further guidance is issued by the Ministry of Finance.
The decree also stipulates the interest rate for innovative start-up SMEs borrowing capital from the Fund. Accordingly, these businesses will be able to borrow at a direct lending interest rate equal to 80% of the lowest commercial lending interest rate (compared to the interest rates of the four state-owned commercial banks with the largest total assets at the time of determining the Fund's lending interest rate).
In addition, each project/plan is eligible for a maximum loan of 80% of the total investment capital of that project/plan. The total loan amount from the Fund to an SME shall not exceed 15% of the Fund's actual charter capital.
The Fund will also continue to implement the salary and bonus system for managers and employees as stipulated in:
– Decree No. 51/2016/ND-CP dated June 13, 2016, of the Government on the management of labor, wages, and bonuses for employees working in limited liability companies with 100% state-owned capital;
– Government Decree No. 52/2016/ND-CP dated June 13, 2016, on salaries and bonuses for managers of wholly state-owned limited liability companies;
– Circular No. 38/2016/TT-BLDTBXH dated October 25, 2016, of the Ministry of Labour, Invalids and Social Affairs on guiding the management of labor, wages, and remuneration for the SME Development Fund until further guidance is issued by the Ministry of Labour, Invalids and Social Affairs.
