Businesses want bank loans rolled over, interest waived

June 28, 2021 - 08:23

Trần Tuấn Anh, director of a three-star hotel in HCM City’s District 1, said hopes of a business revival after earlier waves of COVID-19 were contained have vanished with the latest outbreak, and bankruptcy looms.


Businesses are really in need of new loans and lower lending interest rates to maintain production and to survive. — Photo courtesy of ABBANK

Xuân Hương

HCM CITY — Trần Tuấn Anh, director of a three-star hotel in HCM City’s District 1, said hopes of a business revival after earlier waves of COVID-19 were contained have vanished with the latest outbreak, and bankruptcy looms.

“My business incurred huge losses during previous waves of the pandemic. After it was well controlled, I borrowed some money from a bank to renovate the hotel and offered promotions to attract travellers during the Liberation Day and May Day holidays and summer break.

“We were happy to get many customers in late April and early May, and hoped to revive our business. But the fourth wave of COVID-19 has extinguished our hopes, customers have cancelled their bookings.

“We had some money in reserve and so were able to survive previous waves, but now we have run out. If we cannot get bank loan interest reduced, frozen or rolled over, the risk of going bust is very high.”

Nguyễn Đặng Hiến, vice chairman of the Food and Foodstuff Association of HCM City and general director of Tân Quang Minh Manufacture and Trading Company, said his industry is also facing difficulties.

“The prices of inputs and additives have increased sharply, while most food products are in the list of price-stabilised goods, meaning it is difficult for businesses to increase prices.”

With firms also investing a lot of money to ensure hygiene and food safety and make their factories safe amid COVID-19, costs have increased sharply, he said.

Most businesses in the sector have yet to benefit from the Government’s support packages last year, especially in terms of interest rate waiver and reduction, and the association wants the State Bank of Việt Nam (SBV) to soon add food and essential goods producers to the list of beneficiaries, and accelerate disbursement of loans to buy and stockpile inputs and expand production, he said.

With tourism being one of the industries hardest hit by the pandemic, the HCM City Tourism Association has called on the SBV, Ministry of Culture, Sports and Tourism and city People's Committee to offer more support to travel businesses affected by COVID-19 like reducing interest rate on existing loans, not designing unpaid debts as bad debts and rolling over the loan principal for 24 months.

Nguyễn Thị Khánh, the association’s chairwoman, said some businesses have gone bankrupt and many are at risk of not being able to pay their debts.

“The difficulties faced by the travel, hotel, resort, restaurant, and service supply chain segments have had a big impact on other industries such as road transport, aviation, railways, waterways, and others.

“Therefore, creating specific preferential mechanisms to enable tourism businesses to overcome their difficulties and resume operations soon will also help revive other industries."

The city Department of Transport has also urged the People's Committee and the SBV to direct banks to reduce interest rates and roll over loans given to transport firms.

According to the Department of Labour, Invalids and Social Affairs’ data, so far this year 1,365 businesses have been affected by the pandemic and more than 42,500 workers have lost jobs while 410 companies want to apply for bank loans to pay salaries.

Some 2,274 firms have closed down while 9,308 others have temporarily ceased operations this year.

Chu Tiến Dũng, chairman of the HCM City Union of Business Associations, said a quick survey of over 100 businesses found that more than 84 per cent of small and medium-sized enterprises have been affected by the fourth wave of COVID-19, with 40 per cent running out of resources, 52 per cent having to cut their workforce, 14 per cent having their input supply chain interrupted, and over half having their business affected by social distancing.

According to businesses, while the Government's previous support packages were issued in a timely manner, not many businesses benefited, especially from the loan interest waiver and reduction and new loans.

Now they are really in need of new loans and lower lending interest rates to maintain production and to survive, they said.

Banks to help businesses

Following petitions by the business community, the SBV’s HCM City branch has instructed banks to support borrowers affected by COVID-19 with debt rescheduling, waiver and reduction of interest and new loans as prescribed in the central bank’s circulars 01/2020 and 03/2021.

And banks have launched preferential credit packages.

An Bình Commercial Joint Stock Bank (ABBANK), for instance, has set aside VNĐ3 trillion (US$130.13 million) and $80 million in dollars for preferential loans at interest rates starting at 4.84 per cent and 2.1 per cent under its ‘Ưu đãi lãi suất – Vững bước thành công’ programme until September 30 with simple procedures.

Through the VNĐ4 trillion ($173.17 million) Nhận vốn ưu đãi – Kinh doanh siêu lãi” programme, by September 30 it plans to provide SMEs with an annual revenue of less than VNĐ300 billion ($12.98 million) with loans for up to 12 months at an interest rate of 5.9 per cent to carry on their business after the pandemic or for capital expenditure.

It also offers SME customers who need medium- and long-term funds loans at a preferential interest rate of only 8.5 per cent for the first six months or 9.5 per cent for the first year under its ‘SME – Tiếp vốn đầu tư’ programme.

Lê Hải, its general director, said: “ABBANK has designed preferential lending packages based on the actual needs of corporate customers to join hands with them to promptly mitigate their difficulties and speed up production after the epidemic ends.”

Sacombank has set aside VNĐ10 trillion ($4324.47 million) for preferential loans to corporate customers at interest rates starting at 4 per cent for a maximum tenor of six months to help exporters and businesses overcome the difficulties caused by the COVID-19 pandemic.

The programme targets enterprises ranging in size from micro to large that use the bank’s services like e-banking, salary payment, guarantee, international payment, and others.

The interest rate will be 4-6.7 per cent depending on the type of business, scale of operation, loan tenor, and the use of the bank’s services.

The loans will be given until December 31 or the package is exhausted.

Other banks such as VPBank, SCB, MSB, and Agribank also have preferential lending packages. — VNS