MSMEs struggle to access credit due to a lack of collateral, inadequate financial records that fail to meet bank requirements, and existing bad debt. – VNA/VNS Photo

HCM CITY – Many micro, small and medium-sized enterprises (MSMEs) in HCM City struggle to access credit, despite banks offering numerous loan packages with preferential interest rates.

Key barriers preventing these MSMEs from accessing bank credit include lack of collateral, inadequate financial records that fail to meet bank requirements and existing bad debt.

Việt Nam's tourism industry is on a growth path from 2024, aiming to attract 22-23 million international and 120-130 million domestic tourists.

Businesses in the sector are forecast to recover this year.

However, tourism MSMEs are facing significant challenges in accessing bank credit to support their business operations.

General Director of Vietnam Tourist JSC Phạm Anh Nhân said that banks currently offer preferential credit packages, including both unsecured and secured loans for businesses.

However, accessing capital for tourism businesses is not easy. 

To obtain bank loans, businesses must provide financial documents, including financial statements for the past three years and must show positive profits.

Nhân mentioned that during the COVID period of 2021-2022, most tourism businesses reported losses.

This has made it very difficult for them to access bank loans, he added.

Similarly, construction material MSMEs in HCM City also face difficulties accessing bank loans.

This is due to the challenges in implementing real estate construction projects in the city.

In order to maintain operations, small businesses resort to pledging assets for financial resources to cover salaries and working capital.

A representative of a business said that, "at this time, our company wants to invest in expanding production but no longer has collateral to secure loans. Therefore, the company has partnered with customers, using their collateral to borrow funds. However, because the third party's assets are not related to the company, some banks refuse to approve the loans.'"

Solution proposals

According to a survey by the HCM City Union of Business Associations (HUBA) released in February this year, 37 per cent of businesses in the city are facing a shortage of operating capital.

HUBA also mentioned that many businesses are currently short of funds to repay previous debts and supplement working capital for their operations.

Meanwhile, many family-owned businesses owners use personal assets to borrow consumer loans and other funds for their business investment activities, leading to a capital deficit. 

Nguyễn Phước Hưng, permanent deputy chairman of HUBA, said that local businesses are at a disadvantage compared to FDI in terms of capital.

Many businesses are struggling and may not recover without state assistance.

VNĐ217 trillion in bonds will mature this year, including around VNĐ100 trillion in the residential real estate sector.

Hưng said that the government and State Bank offer support policies for businesses, but these are not highly effective.

The reasons for this include strict eligibility conditions, inconvenient procedures, and legal obstacles.

The country’s state bank region 2 in HCM City is collaborating with local commercial banks to implement a VNĐ507 trillion credit package.

However, access to this package is mainly focused on units with good credit ratings and assets to secure the loan.

The HCM City business community requests that the State Bank extend its interest rate reduction and debt repayment restructuring policy and maintain debt classifications according to Circular 02/2023/TT-NHNN to support customers facing difficulties. 

They also petition banks to offer broader, easier loans for family businesses or simplifying conditions and procedures.

In addition, HUBA said while MSMEs struggle, large firms and banks profit from tech and improved management.

Therefore, businesses propose commercial banks share their burdens by lowering net interest margins (NIM), to minimise borrowing interest rates.

A HUBA representative stated, “With a stable economy and low exchange rate fluctuations (lower than 2 per cent per year), a NIM of at least three per cent is considered high compared to foreign currency loans at only 1.5-2.5 per cent.”

"Therefore, businesses petition the banking sector to reduce the NIM to 2.5 percent to support the business community."

Moreover, HUBA proposes the State create policies to develop alternative funding sources like real estate funds and foreign investment.

Additionally, they highlight that policies supporting corporate bond issuance are vital for businesses to raise capital independently from bank loans. – VNS