• seeking-sme-loanseeking-sme-loan

For SME owners, seeking financial assistance such as applying for a loan can propel the business forward. Loans unlock more capital quickly, allowing SMEs to move faster on new opportunities and gain a lead in terms of the competition. It's important for business owners to understand the loan application process so that they're well-prepared when they seek out financial support and increase their chances of success.

A first and vital step to this process is to be clear on the specific purpose of the loan. Whether the funds will be used for fixed asset acquisitions, expansion plans or simply to bridge the gap between the time of procuring inventory and collecting proceeds from sales, the purpose needs to be clear from the outset. It also helps to have your purpose backed by a documented business plan that demonstrates you've thought very carefully about your growth strategy and have outlined very clear tactics for expansion.

One of the first things banks look at is the borrower's and guarantor's reputations or track records for repaying debt. In Vietnam, banks extract credit reports from a national credit bureau to find out this information. Only Credit Information Center (CIC) appointed by the State Bank Vietnam (SBV) are allowed to collect credit information on individuals and corporates. A credit report reveals important details such as:

  • Records of all credit checks
  • Credit repayment trend for the past 12 months
  • Default records, if any, will be displayed from the date they were uploaded at the CIC

Banks also look at your business’ existing resources to determine if you are adequately equipped to repay the loan that is being applied for. They also take into consideration the required cash flow to support your debt commitments and expenses. The more robust the cash inflow, the more certain it is for the company to service its regular commitments and manage any contingent expenses. In return, this increases the company’s reliability in the eyes of the loan approver.

Banks also need to determine a company’s financial health. A good rule-of-thumb is to keep timely financial reports ready so that you avoid scrambling at the last minute when you need to compile the documents for your loan application. SMEs that want to streamline the financial reporting process can utilise digital accounting tools that are readily available.

The availability of collateral helps reassure banks that applicants have assets that can compensate for any failure to repay a loan. Typical sources of collateral for loans include real estate and equipment. Other types consist of business inventory and outstanding business invoices. Equipment and commercial vehicle financing loans or business property loans are some forms of secured loans against the assets financed by the bank.

It’s worth noting that this isn’t always required, depending on what type of loan you’re applying for. There is unsecured lending program for online businesses that do not require collateral. This reduces risk and barriers to entry for SMEs, giving them more flexibility and speed when it comes to additional cash to take on business opportunities.

Taking out a loan is an effective option for SMEs to accelerate business growth instead of being bogged down by limited capacity to expand. It pays for SME owners to be well-prepared for the application process. By fully understanding the criteria that banks evaluate, they can ensure that they’re doing everything they can to secure a business loan successfully.


Vo Ho Thuc Doan, Founder, Kooka Bakery Company

On behalf of small and medium enterprises, I feel the access to capital from banks encountering barriers of collaterals and complicated procedures. In addition to secure loans, banks also have unsecured loan products are suitable for online businesses nowadays. The demand for loans has been steadily increasing based on the fastest growing economic situation, and the support of the bank has contributed to boosting the economy to some extend further.

Bui Thi Ngoc Phuong, Director, NOP Ltd. Co

I used a mortgage service from the bank to help me effectively manage the company's cash flow and save office lease, take advantage of available assets to mortgage to construct and develop current offices. Before I decided to get a loan, I also have search information, estimated interest rate monthly and compared to paying monthly office rental is quite high. The UOB loan service is pretty fast and private with wise counsel brings invaluable experience between businesses and banks.

Loi Gia Hy, Director, Tan Hiep Phat Manufacture & Commercial Joint Venture Company

As one of the enterprises in the field of manufacturing, I found that lending from the banks help my business quickly handle the strategic issues as follows:

1. Always have working capital when entering new resources.

2. Help the company have enough capital to invest in developing the company fast.

3. Have enough capital to seize any investment opportunity when have some urgent business.

4. Have sufficient capital to expand the market development in the shortest time.

Currently, I need to develop and apply the advantages of 4.0 technology into business and access through the retail markets , hoping to connect with UOB will help me keep in touch, communicate and acquire more information for sustainable development

Truong Cong Quang Minh, Co-founder, Wecreate Joint Venture Company

The article shows me the basic steps for the bank to approve application for drawdown for businesses, but the most important part is given in the first part is outline of the corporate loans purpose, and I would like to share some additional experiences that my company learned when borrowing money:

  • How to calculate bank interest rates: The initial interest rate is attractive (only 7-8% per year), accompanied by a low floating margin (only fluctuate 3-3.5%), be aware and ask for the number. Additionally, the bank has two types of interest calculation which are calculated by reducing the outstanding balance (only on the actual amount you owe, after deducting the original amount you paid in the previous periods) and calculated according to initial balance (the interest on the principal outstanding is interest will be calculated on the amount of your initial loan during the loan term).
  • Understanding the fees payable when borrowing money : early repayment charge.
  • Take advantage of professional support on banking procedures: in fact, bank loan procedures are not complicated. If looking to reputable banks, having professional and enthusiastic support staff, you will find the bank loan terms quite clear and fair.
  • Smartly opt to a preferential loan package: Since the loan package is designed for each different audience, you should learn carefully to choose the most suitable and preferential program for you.
Truc Le, Founder, Kensofa.vn

Such a useful information that provide enough necessary procedures and processes for business loan. It supports entrepreneurs saving time for business growth.