Expanding preferential funding to support production and business
Preferential funding is being expanded, creating more favorable conditions for Hai Phong businesses to carry out production and business activities.
Opportunities from new funding sources
Xuan Cau Packaging JSC in Tan Hung Ward is completing an application for a preferential loan from a local bank. The expected funding will be used to purchase raw materials, organize production and fulfill orders.
According to Pham Thi Hang, Director of the company, in addition to preferential interest rates and loan terms, the business is also concerned about lending conditions and whether funding can be provided when needed.
“If we can reduce financial costs, we will have more resources for production. But to obtain a loan, we also have to prepare complete documentation, demonstrate our funding needs and our ability to use the funds effectively,” said Hang.
Opportunities are expanding as more banks roll out preferential credit programs for small- and medium-sized enterprises and economic growth drivers. By September 18, 19 banks had announced programs and products with a total scale of more than VND 407 trillion, compared with the initially registered VND 220 trillion.
Loans under the programs carry interest rates at least 1 percentage point per year lower than the respective banks’ average lending rates for loans with the same maturities; some programs offer reductions of 1-2 percentage points per year.
In Hai Phong, the need to properly prepare for loan conditions is closely linked to the characteristics of an economy with a large-scale manufacturing and export sector and many businesses participating in supply chains. Capital needs are often directly tied to raw materials, orders, machinery, technology and production cycles. To access preferential funding, businesses need to accurately identify their needs, select appropriate programs and demonstrate their ability to use capital effectively.
According to Nguyen Quang Trung, Director of BIDV Thanh Dong, banks need to understand actual demand and assess business plans to select programs suitable for each customer. Businesses that provide complete information on the purpose of the loan, capital-use plans and repayment sources, and engage with banks at an early stage, will have an easier time during the appraisal process.
Proactive efforts by each enterprise
A viable loan plan needs to start with actual production and business activities. Businesses borrowing to purchase raw materials, fulfill orders or invest in machinery must clearly determine their capital needs, usage period, expected returns and repayment sources.
For construction businesses, capital needs are also closely tied to the progress of each project. Tran Van Hung, director of a company specializing in civil construction in Hai Duong Ward, said the business has to calculate funding for materials and labor while cash flows in according to payment schedules. “To access loans on favorable terms, businesses also have to demonstrate what the capital will be used for, how cash will flow in and what their repayment capacity will be. The clearer the plan, the easier it is to work with the bank,” said Hung.
Enterprises also need to proactively learn about credit programs rather than only paying attention when borrowing needs arise. Each bank has different target customers, loan terms, conditions and preferential policies. Identifying suitable programs early helps businesses prepare documentation and financial plans and arrange borrowing in line with production needs, avoiding a situation in which they only complete the procedures when funds are urgently needed.
Businesses’ proactive efforts need to go hand in hand with support from banks. According to a representative of the State Bank of Vietnam’s Region 6, credit institutions in the area are required to balance funding for production and business activities, priority sectors and feasible key projects; review and simplify loan procedures and documentation without relaxing credit conditions.
More than VND 407 trillion in preferential credit opens up additional funding opportunities, but for those opportunities to reach individual factories, construction projects, orders and investment projects, businesses must proactively improve the quality of their operations. For Hai Phong enterprises, stronger management, financial capacity and business plans will improve their ability to access suitable funding, creating more favorable conditions to expand production and business activities and contribute to the city’s growth.
HA KIEN