Business households are a popular type of business that contributes greatly to the strong development of the economy. Nowadays, many banks provide credit packages for individual business households to promote this group of subjects to develop production. When having stable finances, small business households can carry out strong plans and expand market share. So what is a business household loan? What are the conditions and documents for a loan? Please follow the article below by Viet My Law and Accounting to evaluate in detail this form of loan.

1. Can individual business households borrow from banks?

Circular 39/2016/TT-NHNN regulating lending activities of credit institutions and foreign bank branches to customers, Circular 43/2016/TT-NHNN, Circular 18/2019/TT-NHNN amending and supplementing a number of articles of Circular 43/2016/TT-NHNN of the Governor of the State Bank of Vietnam regulating consumer lending by finance companies have regulated the issue of consumer lending within the scope of finance companies:

• Customers are legal entities with civil legal capacity as prescribed by law. Customers are individuals aged 18 or older with full civil act capacity or from 15 to under 18 years old who do not lose or have limited civil act capacity as prescribed by law;
• Need to borrow capital for legal purposes.
• Have a feasible capital use plan;
• Have financial capacity to repay the debt.

These are the necessary conditions that a legal entity or individual must meet in order to borrow capital from a bank.

For individual business household loans, this is a form of business that does not have the status of a legal entity according to the provisions of the current Enterprise Law, so it will not be entitled to borrow capital from a bank in the role of an individual business household.

However, an individual business household can borrow capital from a bank as an individual borrower who meets the conditions such as an individual aged 18 or older with full civil act capacity or from 15 to under 18 years old without losing or limiting civil act capacity according to the provisions of law.

In the case of borrowing capital for the purpose of serving business activities, an individual can borrow to meet the capital needs of the business household of which that individual is the owner. In this case of borrowing capital, the owner of the business household is of course no longer the representative of the business household in borrowing capital.

In other words, the loan application will be under the name of a separate individual, the borrower will be responsible for repaying the debt as an individual, not as a sole proprietorship owner.

2. Who is currently eligible for bank loans?

According to the provisions of Clause 3, Article 2 of Circular 39/2016/TT-NHNN on lending activities of credit institutions and foreign bank branches to customers, customers borrowing capital from credit institutions include:

– Legal entities established and operating in Vietnam, legal entities established abroad and operating legally in Vietnam;

– Individuals with Vietnamese nationality, individuals with foreign nationality.

Business households are not legal entities, so they are not eligible for loans from credit institutions. Therefore, currently, those who are using the type of business households and want to borrow capital from banks can only borrow in the form of individual business owners.

3. Current forms of business household loans

Currently, there are many forms of loans for small businesses, so customers need to consider their needs to choose the form that suits their purpose. Below are 3 common forms:

Mortgage loans

This is a traditional form of borrowing, familiar to many people. The loan condition is that the business household must have collateral. The loan amount will usually be equal to 80% of the value of that asset. Small businesses that own valuable assets can apply for this form of borrowing. The advantage of mortgage loans is the long loan term (up to 25 years) and low interest rates.

Overdraft loans

This is a form of borrowing that helps to quickly meet the urgent capital mobilization needs of small businesses. Based on the reputation and credit history of the business household, the loan limit can exceed the actual amount in the account. The advantage of this form of borrowing is that the interest rate is only calculated when the amount of spending exceeds the actual amount.

For example: The business household’s payment account currently has 50 million VND. When applying for an overdraft based on a business household’s account, the bank may allow you to spend up to 150 million VND. However, if the customer uses 70 million VND, the bank will only charge interest on 70 million VND.

Unsecured loans

In contrast to mortgage loans, unsecured loans do not require collateral but rely entirely on personal reputation to consider loan repayment. The loan limit for this form is often higher than overdrafts, up to 300 million VND. The repayment period is up to 36 months depending on the regulations of each bank. Unsecured loans are considered suitable for small businesses because they do not require ownership of valuable assets, and the loan amount is suitable for capital needs and business scale.

4. Conditions for business households to borrow capital from banks

In order for the individual business household owner to be considered and decided to borrow capital by the Bank, this individual must first meet the conditions for borrowing capital in Article 7 of Circular 39/2016/TT-NHNN as follows:

– The individual business household owner must have full civil act capacity according to the provisions of law.

– The need to borrow capital for legal purposes.

– Have a feasible capital use plan.

– Have financial capacity to repay the debt.

5. What are the procedures for borrowing capital for business households at banks in 2025?

Normally, the procedures for borrowing capital from banks for business households include the following basic steps:

Step 1: Prepare a complete loan application and provide information as required by the bank. The information usually includes personal documents, loan purpose, loan amount and loan term, etc.

Step 2: After receiving the application, the bank will conduct an appraisal, asset valuation and re-check all the information provided by the customer.

Step 3: After the appraisal, if the customer meets the loan conditions, the bank staff will prepare a credit proposal and request approval from the competent authority.

Step 4: After the loan is approved, the bank staff will carry out the loan disbursement procedure.

6. Capital needs that will not be granted loans

Credit institutions are not allowed to lend for the following capital needs:

– To carry out business investment activities in industries and professions that are prohibited by law from investing in business.

– To pay for expenses, meet financial needs of transactions and acts prohibited by law.

– To purchase and use goods and services in industries and professions prohibited by law from investment and business.

– To purchase gold bars.

– To repay credit loans at the lending credit institution, except for loans to pay interest on loans arising during the construction process, in which interest costs are calculated in the total construction investment approved by competent authorities according to the provisions of law.

– To repay credit loans at other credit institutions and repay foreign loans, except for loans to repay loans before maturity, when the following conditions are fully met:

+ The loan is for business activities;

+ The loan term does not exceed the remaining loan term of the old loan;

+ The loan has not been restructured.

7. Advantages of individual business loans

When borrowing capital for individual businesses at the bank, customers will receive the following benefits:

• Competitive loan interest rates, suitable for many customers.
• Fast and simple loan documents and procedures help customers easily access capital.
• Flexible debt repayment period, ranging from 6 – 36 months or can be extended according to the agreement in the contract to reduce debt repayment pressure.
• You can borrow for household business without a business registration certificate.
• You can mortgage with pink books, red books, savings books, etc.
• Short application review time, disbursement only 48 hours after the application has been approved.

Viet My Law and Accounting will represent customers to resolve cases related to the issue of “business loans”. With many years of experience in the legal industry and a team of experienced and professional legal experts, we will support you to resolve problems without any obstacles. Please contact hotline 0981 345 339 for detailed discussion, to expedite the work quickly, confidentially and reliably.