How to apply for a business license to borrow capital is always a matter of concern. This procedure is often quite complicated, so businesses, companies, and enterprises need to pay close attention when preparing documents. Join VIET MY LAW AND ACCOUNTING to learn more about the procedure for applying for a business registration certificate to borrow capital in the article below!

1. What is the concept of a business license?

Before learning about applying for a business license to borrow capital, let’s find out with us what a business license is?

A business license is an official legal document issued by a regulatory body to an individual or organization, allowing them to conduct business or commercial activities. This license is an important part of running a legal business and may include the following information:

• Business owner information: This includes the name, address, and contact information of the owner or legal representative of the business.
• Business type: A description of the type of business activities the business will conduct.
• Business location: The specific address where the business will operate.
• License date: The date the license was issued.
• License duration: The limited time period during which the business is allowed to operate under this license.
• Conditions and restrictions: Specific conditions and restrictions that the business must comply with when operating.

A business license is an important document for businesses, helping to determine the rights and responsibilities of business owners, while ensuring compliance with legal regulations related to business activities.

2. Forms of applying for a business license to borrow capital

There are 7 types of applying for a business license to borrow capital as follows:

• Registering to establish a business household;
• Registering to establish a business with capital contributed by Vietnamese individuals and organizations, including types according to the Enterprise Law 2020 such as:
  – Private enterprise;
  – Partnership;
  – LLC, including: Single-member LLC and LLC with two or more members;
  – Joint stock company;
• Registering to establish a business with capital contributed by foreign individuals and organizations.

3. Common types of business loans today

There are two forms of loans provided for businesses and individuals to choose from to support business activities, including:

Unsecured loans: This is a form of loan that does not require collateral, only requires a business license. The bank will consider based on the customer’s reputation and ability to repay. This form is chosen by many individuals and businesses because the procedures are simple and quick.

Mortgage loans: To borrow capital in this form, you need to have collateral such as a house, land or red book. The bank will use this asset as a guarantee for the loan. Mortgage loan procedures are often more complicated than unsecured loans, but the benefit is that you can borrow a larger amount of money and the interest rate is often lower.

4. Advantages of apply for a business license to borrow capital

For businesses, having a legal business license is a very important factor, especially when they need to borrow capital from banks or financial institutions. Below are the main advantages of applying for a business license to borrow capital:

• Increased access to credit capital: Banks and financial institutions often prioritize lending to businesses with legal business licenses. This helps them assess the legality and risk level of the loan more accurately. Having a business license will significantly increase the possibility of being accepted for loans from credit sources.
• Ensuring transparency and efficiency in management: When having a business license, enterprises must comply with regulations on information disclosure, financial reporting and business operations. This increases transparency and efficiency in management, helping sponsors to more accurately assess the financial situation and operational capacity of the enterprise.
• Increasing opportunities for cooperation and market expansion: When applying for a business license to borrow capital, the enterprise will be recognized as a legal and more professional business entity. This helps increase opportunities for cooperation with domestic and foreign partners, expand the business market and access new investment capital.
• Increasing prestige and trust with customers: A business license is an important factor for customers to evaluate the prestige and professionalism of the enterprise. Having a license will make customers feel more secure when dealing with a business and trust the quality of the products or services they provide.
• Compliance with legal regulations: Having a business license ensures that the business is operating in accordance with current legal regulations. This not only helps avoid legal risks but also demonstrates the business’s sense of responsibility and compliance with the law, contributing to creating a transparent and healthy business environment.

5. Conditions for borrowing capital

Before choosing any form of borrowing capital, you should carefully consider and learn about the specific terms and conditions to ensure suitability and compliance with legal regulations. To apply for a business license to borrow capital, you must comply with the following conditions:

• Nationality: The customer must be a Vietnamese citizen.
• Age: The customer’s age must be between 18 and 75.
• Business license: The business license must be registered in the customer’s name. In case the business license is registered in the name of another person, the customer must have the consent of that person.
• Collateral: For large loans at the bank, the customer must have collateral.
• Business activities: The customer’s company/enterprise must be operating well, have stable income and development potential.
• Loan purpose: The loan purpose must be clear and comply with legal regulations.
• Location: Customers need to have a current address at one of the branches or transaction offices of the bank they want to borrow from.

6. Documents to prepare for apply for a business license to borrow capital

When customers want to borrow capital from a bank, they need to prepare a complete dossier including the following information and documents:

6.1. Business registration dossier

To apply for a business license to borrow capital for a business household, customers need to prepare the following documents:

1. Business registration dossier according to a business household: Including an application for business registration according to a business household.
2. A valid copy of the owner’s ID card.
3. A copy of the house ownership certificate or a lease contract certified by the People’s Committee of the commune, ward, town or a state notary office (where the business location is located).

For applying for a business license to borrow capital for a company, the documents to prepare include:

1. Application for registration of company establishment.
2. Draft of the company charter certified by the capital contributors in the company.
3. List of shareholders, founding members with signatures of all shareholders, members and legal representatives according to the prescribed form.
4. Notarized copies of ID cards or passports of members or shareholders attached.

6.2. Loan application

When applying for a business license to borrow capital, customers need to prepare the following documents:

1. Loan application (according to the bank’s form).
2. Notarized copy of ID card/citizen identification card (notarized within 6 months).
3. Notarized copy of household registration book and original for comparison.
4. Business license of the borrower or the guarantor.
5. Tax statement submitted to the tax authority in the last 3 months.
6. Detailed plan on the purpose of using the loan capital.
7. Documents on secured assets.
8. Detailed list of debt repayment plan.

7. Notes when applying for a business license to borrow capital

When applying for a business license to borrow capital, there are some important notes that need to be kept in mind so that the licensing process goes smoothly and effectively. Below are the main notes that businesses need to understand:

• Check business conditions: Before submitting an application for a business license, businesses need to carefully check the business conditions according to the provisions of law. This includes conditions on legal capital, facilities, human resources, technology, environment and other conditions depending on the business line.
• Prepare complete documents: Business license application documents usually include documents such as a license application, copies of the business’s legal documents, a declaration of business conditions and other related documents. Businesses need to prepare these documents completely and accurately to avoid having their documents returned or having to supplement them later.
• Compliance with procedures and processes: Each type of business and business sector will have different procedures and processes for applying for a business license. Businesses need to carefully study and comply with these procedures and processes to ensure that their applications are processed quickly and effectively.
• Prepare documents related to the loan project: When applying for a business license to borrow capital, businesses need to prepare additional documents related to the loan project such as business plans, financial reports, documents proving financial capacity and other documents as required by the sponsor.
• Comply with internal management regulations: After being granted a business license, businesses need to comply with internal management regulations such as establishing a system of books, reporting regimes, information transparency and compliance with other relevant legal regulations.
• Update information and renew licenses promptly: Business licenses have a certain validity period. Businesses need to update information and renew licenses in time before they expire to ensure continuous and legal business operations.

The above article by VIET MY LAW AND ACCOUNTING has provided important information about applying for a business license to borrow capital. If you have any questions related to legal documents, please contact us directly through our Website channels or direct hotline!