The Government to launch $86 million fund to finance start-ups

By Viet Hung - Aug 11, 2018 | 01:36 AM GMT+7

TheLEADERStart-ups will be provided with loans from the small and medium enterprise development fund with interest rates not exceeding 80 per cent of the lowest levels at commercial banks in which the State owns over 50 per cent of capital.

This is an off-budget, non-profit governmental fund that is established by the Prime Minister with the purposes of lending and financing start-ups and small and medium enterprise (SMEs) joining in the industrial cluster and value chain.

The Government’s draft Decree on the organization and operation of the small and medium enterprise development fund (SMEDF) is being prepared by the Ministry of Planning and Investment (MPI). According to the draft, the fund will cover a charter capital of VND2 trillion ($86.1 million).

Loan conditions are that start-ups and SMEs involved in industrial clusters and value chain shall have effective production plans and account for at least 20 per cent of the total investment capital of the project. In addition, they shall be capable of repaying loans and satisfying the provisions on loan security as regulated by law.

There are two different levels of interest rates subject to the loan term, business sector or credit rating of enterprises.

The fund will operate as a one member limited liability company with 100 per cent of charter capital held by the State. The organizational structure is composed of the management board and its members working concurrently.

The fund will apply the method of direct lending rather than entrustment for lending to SMEs through commercial banks.