With a support package of VND26,000 billion, businesses can borrow loans at 0% interest rate at the Bank for Social Policies and do not have to guarantee the loan, to pay wages for workers as well as temporarily stopping paying the retirement and survivorship fund for six months from the time of submission. Although the procedure is simpler than the previous support package, many businesses still cannot access this support package.

Small and micro enterprises find it difficult to access capital. Illustration: ST

Enterprises with bad debt have difficulties

The fourth wave of Covid-19 has caused many businesses to stop operations. Faced with the above situation, the Government has issued Resolution 68 on supporting employees and employers with a value of VND26,000 billion with 12 groups of policies, targeting businesses and employees. Compared with the previous rescue package of VND62,000 billion, many procedures of the new package have been cut.

A notable point in this support package is that businesses will be able to borrow loans at 0% interest rate from the Bank for Social Policies to pay wages and restore production. Enterprises send dossiers to Social Insurance for confirmation within two days, then transfer to the Social Policy Bank for approval and disbursement within the next week. The budget dedicated to this policy is about VND7,500 billion, accounting for more than one third of the total package of VND26,000 billion, from refinancing loans, no collateral, and 0% interest rate from the State Bank.

Compared with the support package of VND62,000 billion, the new policy removes the requirement to prove revenue or corporate finance, but businesses must have no bad debt at the time of applying for a loan. This is the reason that some businesses cannot access this support package.

According to Mr. Nguyen Quang Thang, owner of a travel business in Hanoi, when implementing Resolution 42 of the Government, there were very few tourism businesses accessing preferential capital. Up to now, many businesses, including tourism businesses, have had to stop operating, or operate in moderation. The business which he manages has also been temporarily closed for a long time, 85% of employees have quit, the rest work in moderation and alternately.

Regarding the difficulties in accessing loans under Resolution 68, Mr. Nguyen Quang Thang said that after learning the procedures and conditions to receive support from the VND26,000 billion package, I was told the application file includes a loan application letter, list of employees who have stopped working, a notarized copy or a copy enclosed with the original (for comparison) of one of the following documents: certificate of business registration, business license, investment license; list of unemployed workers. And especially, there is a requirement that businesses borrow loans with 0% interest from the Bank for Social Policies to pay wages to stop working and restore production, they must have no bad debt at the time of loan application.

“Due to many difficulties from the 1st, 2nd and 3rd waves of the pandemic, our entire accumulated funds have long been exhausted, we have to borrow capital to pay salaries and maintain business operations, so now we still have bad debt at the bank. This makes it impossible for me to access this support package while this is our only 'lifebuoy' at the moment, if there is the support package, we will have to go through the bankruptcy procedure," said Mr. Nguyen Quang Thang.

Need more convenient conditions

According to data from the General Statistics Office, in the first six months of the year, there were 35,600 enterprises suspending business for a definite time, up 22.1% over the same period last year; 24,700 enterprises stopped operating and waited for dissolution procedures, up 25.7%; 9,900 enterprises completed dissolution procedures, up 33.8%. Thus, on average, 11,700 businesses withdraw from the market every month.

In fact, a business without bad debt is rare. Because during a long period of the pandemic, the health of most businesses, especially small and micro enterprises, has been exhausted, many loans are difficult to pay; old debts are stacked on top of new debts. This criterion is not feasible for businesses.

Mr. Nguyen Quang Thang, a representative of Minh Hieu Construction and Trading Co., Ltd. said that as an enterprise in the building materials industry, although the conditions of the VND26,000 billion package have been eased, meeting the criteria for support is very difficult.

“In order to be able to endure for more than a year, I had to mortgage my property, borrow money from the bank, so my company is currently in a bad debt situation. With the criteria given in the package of VND26,000 billion, my business is definitely not able to access it.”

According to the assessment of many experts, learning from the previous support package, this support package has cut up to two-thirds of administrative procedures compared to previous support packages.

Although many conditions and procedures have been reduced in this package, according to economist Nguyen Tri Hieu, to avoid a repeat of the situation like the previous support package, it is necessary to continue to cut more. Conditions for loans, as well as the need to speed up the disbursement process to enterprises as quickly as possible.

Economic expert Nguyen Tri Hieu said that in the first support package and this support package, the condition that businesses do not have bad debts of banks is too difficult for small businesses and micro businesses. These businesses will continue to not be able to access this new package of VND26,000 billion.

“Businesses already have bad debts from banks, if they lend more but are afraid that they will not be able to pay, banks create conditions for enterprises with bad debts of group 3 (debts below the standard - overdue from 90 days to 180 days) to be allowed to lend. Group 4 bad debts (doubtful debts - 180 days to 360 days) and group 5 bad debts (debts likely to lose capital - from 360 days or more) can be excluded from the support package," said expert Nguyen Tri Hieu.