SMEs encounter difficulties accessing banking loans
(VOV) - Gaining access to capital is an ongoing concern for small and medium-sized enterprises (SMEs), particularly in light of the increased need for working capital brought about by Vietnam’s integration into the ASEAN Economic Community (AEC).
At a seminar in Hanoi on November 18 discussing SMEs’ capability to access bank loans, General Director of the Institute of Manpower, Banking and Finance (BTIC) K. Balasingam said many SMEs have recently been forced to close their doors due to shortage of working capital.
Only 30% of SMEs have the ability to obtain needed working capital by accessing bank loans, while the remaining 70% have to raise the funds through equity financing arrangements with investors at a significantly higher cost, he said.
Echoing Balasingam’s view, SME Management Science Institute Director Pham Ngoc Long in turn said that since 2011, SMEs have not enhanced their competitive edge and have continued to encounter hindrances in getting access to capital resources.
Tran Trung Kien from Techcombank said one of the issues faced by banks is the shortage of medium and long-term capital resources at reasonable interest rates to meet the SMEs’ demand.
Kien added SMEs have also encountered difficulties in improving transparency in financial reports while banks can approve loans based on these reports. In addition, SMEs’ business plans are generally incomplete or inaccurate and are not sufficient to persuade banks to provide loans.
At present, SMEs in Vietnam have played a key role in generating jobs, increasing income, and reducing poverty. They have used up to 51% of labour force and contributed more than 40% to GDP annually.