Tips to help businesses borrow money from banks is a topic that many people are interested in today. Because not everyone will be successful in borrowing capital from banks to maintain and develop their business activities. Therefore, in this article, VIET MY LAW AND ACCOUNTING will reveal all the tips to help you borrow capital from banks in the easiest way.

1. Who can borrow capital from banks?

Before finding the answer to the question “What is the secret to helping business households borrow capital from banks?”, you need to know which subjects are eligible for bank loans, whether business households are one of the subjects eligible for loans or not?

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

• Legal entities established and operating in Vietnam and legal entities established abroad, legally operating in Vietnam
• Individuals with Vietnamese nationality, foreign nationality

Business households without legal entities, which means that business households are not eligible for loans from credit institutions. Therefore, currently, those who are using this type of business and want to borrow capital from the bank can only borrow as an individual business owner

2. Revealing the Tips to help businesses borrow money from banks easily

The secret to help business households borrow capital from the bank quickly and easily is to help borrowers understand the basic knowledge surrounding this issue.

2.1. Conditions for business households to borrow capital from the bank

The conditions for business households to borrow capital from the bank, besides the need to borrow as an individual business owner, there are also a number of other specific conditions. According to Article 7 of Circular 39/2016/TT-NHNN, in order for the Bank to consider and decide to lend, individuals/business owners must meet the following conditions:

• Must have civil capacity according to the provisions of law
• The purpose of using the loan from the bank must be transparent and legitimate
• Have a plan and plan for using the recoverable capital
• Ensure assets are in accordance with the provisions of Vietnamese law
• The borrower’s financial situation is stable, not too weak, and has the ability to pay both principal and interest within the prescribed time

2.2. Forms of business loans at Vietnamese banks

It can be said that if you know the forms of loans, you have grasped most of the secrets to help business households borrow capital from banks. If you do not know the types of loans, you will not know if your loan is suitable and if you borrow unsuitable loans, your application will most likely not be approved by the bank

Currently, at Vietnamese banks, there are 4 most popular loan types: unsecured loans, mortgage loans, overdraft loans and installment loans. Depending on the purpose of using the capital, the business owner will choose the appropriate loan type.

Unsecured loans

Unsecured loans are a form of loan that does not require collateral but is based only on the borrower’s reputation. That is, the borrower only needs to prove income, ability to pay, credit history review, … to be able to borrow unsecured loans. This type of loan has a fairly high interest rate, and the maximum loan term is only 5 years.

Mortgage loans

Mortgage loans are a form of loan that requires the business owner to have assets to be able to borrow. The loan limit can be equal to 80% of the value of the collateral, the loan interest rate will be suitable for the loan, the loan term can be up to 25 years depending on the needs of the business owner.

Note: When taking out a mortgage, you need to pay attention to the accompanying fees such as: Late payment fee or prepayment fee

Overdraft loan

Overdraft loan is a form of loan usually for individuals when they need to use more money than they have in their bank account. Overdraft loan requires the borrower to prove their finances with a salary, the limit granted is only 5 times the monthly salary. And because it is necessary to prove through the salary, the borrower is usually someone with a fixed and tight income each month

Installment loan

Installment loan is a form of loan in which the borrower will have to pay the debt and make regular payments with the same amount. With this type of loan, business owners usually do not have to mortgage assets but only need to complete procedures to prove with banks, lending financial institutions and wait for approval. The loan and repayment period will be agreed upon between the two parties.

2.3. Procedures for carrying out business loans at the bank

The final secret to helping businesses borrow from the bank is to understand the loan procedure. The bank loan procedure will include the following 4 steps:

Step 1: Prepare loan documents

Before proceeding with the loan procedure, bank staff will ask a number of questions such as:

• What is the purpose of the loan?
• How much money do you need to borrow?
• How long will the loan last?
• What is the collateral of the business owner? (in case of mortgage loan)
• What is the average monthly income?
• Is the monthly income stable?

You need to prepare answers to these questions in advance to increase your credibility when facing the bank staff. After completing the survey, the bank staff will review each loan and guide you in making a profile to ensure the loan conditions.

Step 2: Receive loan application and loan appraisal

After receiving the application from the customer, the bank will proceed to confirm the information and re-appraise the application to limit risks and increase the ability to repay the loan

The bank usually requires the following documents:

• Legal documents
• Certificate of establishment or business registration certificate or investment certificate of the company charter
• Decision to appoint the positions of director and chief accountant (if any)
• ID card or passport of the representative who is borrowing capital (usually the business owner)

Tax registration certificate: Financial statements of the enterprise or organization in the last 2 years. Including financial statements, sales contracts, labor contracts (if any)

Loan plan: Including an effective business and production plan, ensuring debt repayment ability and debt repayment plan

Collateral: Collateral will include real estate (land ownership certificates, houses, etc.), tangible assets and other valuable papers (capital contribution certificates, stocks, bonds, etc.)

Step 3: Loan approval

After the application is assessed, the bank staff will prepare a credit proposal and send it to the competent authorities, requesting approval for the loans. When the approval results are available, the staff will send a notice of approved loans to the customer

Step 4: Disbursement

When the application is approved, the borrower will sign the contract and the bank will disburse the loan, providing loans according to the contract. The borrower can receive the loan in cash or by bank transfer.

The normal bank loan procedure will take about 1-3 days. Some more complicated loans can take up to 1 week.

3. Some notes when business households borrow capital from banks

After knowing the secrets to help business households borrow capital from banks, or more precisely, the knowledge needed when business households want to borrow capital from banks, borrowers still need to pay attention to the following notes:

Research carefully to choose the appropriate loan option to be able to plan a reasonable debt repayment plan, minimizing pressure when the payment deadline comes. In addition, when you have a feasible debt repayment plan, your application will also be easier to review
Provide accurate and complete information as required by the bank
Choose a reasonable loan period, divide the amount to be paid. This makes it easier for you to pay off loans and interest when the deadline comes.

Read the terms of the bank loan agreement carefully to understand your rights and responsibilities during the loan process

The above are all the tips to help businesses borrow money from banks that VIET MY LAW AND ACCOUNTING would like to share with readers. If you have any questions about this issue, please call us immediately via the hotline number or leave a comment below this article!