Hoang Thi Hong, chairwoman of the Small and Medium Enterprise Development Fund (SMEDF), said the fund began functioning last April and has identified three lenders, Vietcombank, BIDV and HDBank, through whom to lend to SMEs.

They have started to receive applications for loans, she said.

Hồng said the fund's main aim is to minimise mortgage requirements.

Bui Hoang Tung of SMEDF's monitoring and risk management division said SMEs need to otherwise fulfil a number of conditions, including having feasible production or business plans in prioritised areas.

The maximum loan is 70 per cent of fixed cost – it does not provide working capital -- and must be repaid within seven years. Borrowers can prepay the loans without penalties.

Tùng said the fund has four lending programmes.

SMEs working in innovation and creativity are entitled to loans of up to VND10 billion (US$448,430), he said.

The limits for supporting businesses in agro-forestry-fisheries and electronics and mechanical engineering are VND20 billion and VND25 billion, while SMEs operating in wastewater treatment can borrow up to VNĐ25 billion, he said.

The loans carry a fix interest rate of 7 per cent, he added.

Hong said apart from VND2 trillion provided by the Government, SMEDF would also source capital from the private sector to increase its corpus.

To Hoai Nam, deputy president of the Associations of Small and Medium Enterprises, said there are more than 500,000 SMEs in the country, accounting for more than 90 per cent of all companies.

They face difficulties due to limited competitiveness and funding, but the fund is expected to provide them with new opportunities, he said. — VNS