Businesses want to borrow, depending on the risk "appetite" of the bank

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Could you tell us about the current situation of enterprises' access to capital?

In general, in anormal economic situation, businesses no longer have difficulty in accessing capital. However, due to the impact of the pandemic, for many enterprises, especially small and medium enterprises and micro enterprises, the conditions to get bank loans have not been met.

Firstly, in terms of business plans, many businesses cannot come up with feasible business plans toreduce risks. Many businesses used to focus on export markets, but due to the pandemic, trade islimited, so businesses had to switch to focus mainly on the domestic market, which was narrowed and partners were limited. Therefore, the business plan of the enterprises is not attractive enough for the bank to disburse capital.

Moreover, many businesses have no collateral because they borrowed in the past, so they have difficulty gettingnew loans. Along with that, collateral assets of businesses are also being valued at cheaper prices in the context of the pandemic. In the past, the borrowing enterprise could be able to have 30:70 reciprocal collateral with the bank, which means that the enterprise has counter-collateral assets worth 30% of the loan, the bank lends 70%, but now reciprocal has increased 50:50, even down to 70:30.

Have banks been stricter on lending terms, sir?

Currently, banks have lowered lending rates to a very low level, only 5-6%/year, but the important thing is that the absorption of businesses is very difficult. This is due to both banks and businesses. Banks are also businesses, and have to make a profit, get funding to support staff and machinery, at the same time, ensuring financial safety for the whole system. So, in the difficult economic context due to the pandemic, banks increasing risk prevention is also unavoidable.

In fact, banks always want to lend to businesses, this depends on the risk of each bank. Each period and economic circumstances have different lending terms.

Banks still have to meet the requirements of regulators on interest rates and loan conditions, but can create more favorable conditions and make separate agreements for businesses who meet all conditions according to general regulations and the separate regulations of each bank. However, for businesses that need capital to do business, they do not know what their actual profits will be, banks will have to wait 3-6 months or longer, banks must have an evaluation and depend on their risk "appetite" to decide on a loan.

What should businesses do to meet the lending standards of banks?

Of course, banks with no bad debt and financial transparency are always prioritized. But the most important thing for businesses is to have product calculations to match the trend. This means that businesses should not ramp upproduction, engage infragmented business, but focus on a long-term strategy for the bank to see a feasible business plan.

Enterprises must also link and call on large and reputable enterprises to cooperate to guarantee their loans with banks. This is also a way to increase their reputation.

For example, if an enterprise has a consumption contract or implementation of a stage or supporting products for a large business, the enterprise will have an output-input sale and purchase contract, and transparent liquidity. The bank will have a strong basis for accepting a loan.

Currently, related agencies and industry associations regularly hold banking - business connection programs. However, these programs are basically providing information and solutions at a macro level. In order to be effective for each business, the bank itself and the business must sit together, solve each other's difficulties, give specific detailed documents, give loan terms and interest rates to help each other meet the demand.

Thank you, sir!