HCM CITY — Financial transparency is one of the keys for small firms to access credit, heard a seminar titled “Where can small firms find capital?” held in HCM City on Wednesday.

According to the General Statistics Office, as of 2016 Việt Nam had around 500,000 companies, 60 per cent of them small or micro-sized.

Lack of access to bank finance has for long been a challenge for small firms and one of the main hurdles to their development.

Nguyễn Hoàng Minh, deputy director of the State Bank of Việt Nam (SBV)’s HCM City office, said the SBV and commercial banks have made many efforts to help small and medium-sized enterprises (SMEs) get loans.

HCM City banks-enterprises link-up programme under which firms get soft loans from lenders is an example of that, he said.

Since the programme’s launch in 2012 more than 50,000 SMEs have borrowed more than VNĐ900 trillion (US$38.7 billion).

Minh said the central bank has encouraged its offices in other cities and provinces to adopt this efficient link-up programme.

But he confessed that one of the problems with the programme is that borrowers need to have assets to pledge and this was a major challenge for small firms.

To resolve this problem, the SBV has worked with banks in the programme to allow small firms without assets to use their cash flow as collateral, he said.

He also pointed out that one of the main obstacles to SMEs getting loans is the lack of transparency in their financial statements.

“Many small firms are usually household businesses and do not have a chief accountant professionally taking care of financial matters.”

He said some businesses even use two sets of books to evade tax, which also makes banks reluctant to lend to them.

“Only when banks can learn about firms’ business performance through transparent audited financial statements can the two go with each other over the long term.”

Đặng Đức Huy, director of retail banking at Saigon Commercial Bank, said despite their need for credit some small firms are reluctant to apply for a loan due to their fear of lengthy and complex lending procedures.

"But since banks are now caught up in fierce competition to find customers, they have simplified lending procedures and are constantly improving their services to serve customers better," he said.

He said his bank has several mechanisms to get feedback from customers and staff to prevent any “cheating in lending activities.”

At the moment the bank is lending at 6.5 per cent interest to priority sectors such as high-tech agriculture and services. It also offers loans at 8 per cent interest to other firms, he said.

Apart from bank loans, small firms can also apply for financial assistance from the city’s Credit Guarantee Fund for SMEs, according to Đỗ Tấn Trúc, head of the SMEs support department under the fund.

Through these programmes, firms can get loans from banks with their interest fully subsidised or with 50 per cent subsidies, he added. — VNS