Funding by Loan
Input the presence in Vietnam market by either establishing a company or other investment vehicles is an important step for many foreign investors, and hopefully the beginning of a successful business undertaking.
Considering the context of Vietnam’s economic development, the ever-increasing growth of enterprises continues to demand capital to serve their business. Funding through foreign loan is the most common vehicle to fulfil the needs of working capital for operation.
There are three types of foreign loans that are often engaged by Vietnamese party, in particulars:
(i) short-term loan,
(ii) long-term loan; and
(iii) loan under deferred imported goods.
Strictly controlled by the State Bank of Vietnam (SBV), once foreign loan is activated, certain conditions in terms of loan agreement, loan registration, disbursement & repayment etc. are required to meet. To be specific:
| Items | (i) | (ii) | (iii) | |
| Loan period | Not exceeding 12-month period | From 12-month period and above | Based upon payment term | |
| Initial loan registration | N/A | Required | N/A | |
| Monthly loan reporting | Required | Required | Required | |
| Others | o Loan could be disbursed in lumpsum or in phase, based on T&C detail in “loan agreement
o If failing to pay within loan period, client needs to turn to long-term loan and is required to register with the SBV |
Loan could be disbursed in lumpsum or in phase, based on T&C detail in “loan agreement”
|
N/A | |
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Loan Agreement must be archived; and acts as legal document for loan funding transaction. Along with maintain proper document, monthly loan reporting to State Bank Vietnam (SBV) is required to be completed by all companies upon receiving the first loan disbursement. Due date of monthly loan reporting is 5th date of current month for reporting the previous month. |
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