The Da Nang People's Council-adopted resolution on interest rate support has been benefiting small and medium-sized enterprises (SMEs) operating in the city to access loans from the Da Nang Investment and Development Fund for post-pandemic production restoration and expansion.

A worker from the Da Nang Transport and Chartering JSC. Photo: M.QUE

In the first four months of 2022, the Da Nang Investment and Development Fund has received loan applications from 10 projects. Five of which have been approved for loans totalling VND 67 billion, whilst the remaining 5 projects are being considered for loans with a total value of VND80.5 billion.

Among the five SMEs that have access to the fund's preferential loans is the Da Nang Transport and Chartering JSC (Vfracht Da Nang) located in the Hoa Cam Industrial Park, Cam Le District.

In March 2022, Vfracht Da Nang signed an 8-year credit contract worth VND14 billion at the Da Nang Investment and Development Fund with interest rates of 7% per annum in order to purchase means of transportation of goods.

It is known that Vfracht Da Nang plans to deploy a VND27 billion project on purchase means of transportation of goods. Under the Da Nang People's Council-adopted resolution, the company has been facilitated to access a loan worth VND14 billion from the Fund, accounting for 52% of the value of the project.

Once completed, the project is expected to contribute to promoting the development of the city's ​​logistics industry, attracting labour resources, and driving the development of other industries.

General Director of Vfracht Le Anh Tinh said that SMEs are in great need of credit capital with reasonable and stable interest rates to invest into equipment for expanding their scope and scale of operations.

Recently, the company has received detailed information from the Fund about the content of Resolution No. 60/2021/NQ-HDND. Accordingly, it will be considered to receive support 50% lending interest rates for 2 years from the Fund.

“We appreciate the special care of the city and the Fund’s lending activities in helping SMEs reduce costs and increase investment capital to drive their post-pandemic production and business restoration" said Mr. Tinh.

Under the resolution, the total capital disbursed to implement this Resolution shall not exceed VND200 billion. The city budget will cover 50% lending interest rates according to the Fund’s current regulations on lending interest rate, and the amount of financial support is calculated on the total disbursed capital.

The interest rate support period will not be more than 24 months from the date of signing the credit contract. The maximum amount of disbursed capital supported by the maximum interest rate per enterprise will not be more than VND10 billion. The principle of interest rate support is that the investor is approved for a loan within 12 months from the effective date of this Resolution.

Projects that have already accessed concessional credit capital and State credit guarantees, or have enjoyed other loan interest rate incentives are not eligible for interest rate support under this Resolution. The city budget will not cover the arising bank interest because SMEs do not pay the principal capital in accordance with regulations.

Mr. Pham Bac Binh, Chairman of the Da Nang Small and Medium-sized Enterprises’ Association, said that the lending interest rate at the fund is lower than that of commercial banks and remains stable during the loan process, creating a stable psychology for businesses.

He, also, added the reduction of 50% of the lending interest rates specifically for SMEs according to the resolution showed the city's special care for businesses that are heavily impacted by the COVID-19 pandemic.

Reporting by MAI QUE - Translating by M.DUNG