The Government has approved the establishment of credit guarantee funds for small- and medium-sized enterprises (SMEs) to facilitate higher chances for them to get credit for production and business.

Under Decree 34/2018/ND-CP issued recently, the funds are set up by the people’s committees of provinces and cities. It will operate for non-profit purposes and under the model of one-member limited company with 100 per cent charter capital from the State. The fund must have a minimum charter capital at VND100 billion.

The funds will provide credit guarantee for SMEs to get loans from lenders according to the provisions of the decree and relevant laws.

According to the decree, the eligible firms are SMEs with the potential for development but are not eligible for loans in credit priority areas as stipulated in the decree.

The funds will grant credit guarantees to SMEs at a maximum of 100 per cent of the loan value (including working capital and medium- and long-term capital).

The level of guarantee for an enterprise will be based on the feasibility and risk level of the enterprise, investment project, production and business plan as well as financial capability of the funds. — VNS