Clearing obstacles in collateral-based lending

Accordingly, collateral-based lending has become a “bottleneck” between banks’ goal of improving credit access and businesses’ opportunities to obtain loans.

Challenges for Businesses

According to Resolution 68-NQ/TW of the Politburo, one of the key directives is to boost and diversify capital sources for the private sector. The Resolution calls for “reviewing and perfecting credit mechanisms and policies for the private sector, with policies to prioritize part of commercial credit sources for private enterprises, especially small and medium-sized enterprises (SMEs), supporting industries, and innovative startups to borrow for investment in machinery, equipment, new technologies, green transformation, digital transformation, export credit, and supply chain credit.”

At the same time, the Resolution encourages financial institutions and lenders to provide loans based on appraisals of business models, plans to expand market and to lend based on data, cash flow, and value chains, while considering collateral that includes movable assets, intangible assets, future-formed assets, and unsecured lending.

It can be said that Resolution 68-NQ/TW directly addresses the stereotypes about private enterprises and seeks to resolve the most pressing challenges faced by businesses today.

According to Mr. Gareth Parrington, Senior Director at Visa, SMEs face two challenges: The first is limited access to finance, which creates barriers to growth and development. The second is the need for financing operational activities. In particular, lengthy processes and procedures create bottlenecks in payment and credit approval procedures.

Mr. Nguyen Ngoc Hoa, Chairman of HUBA, noted that many businesses still struggle to access preferential credit and stimulus programs, especially due to prolonged application review times and the lack of standardized response deadlines, causing businesses to miss opportunities and lose initiative.

42% is also the proportion of SMEs facing difficulties in accessing credit, according to Mr. Ho Van Long, Deputy CEO of VIB. Mr. Long emphasized that this rate could increase significantly in the context of global macroeconomic instability or the impact of tariffs, among other factors.

Diverse Ways to Remove "Bottlenecks"

To realize Resolution 68-NQ/TW, Mr. Tu Tien Phat, CEO of ACB, said that ACB is simultaneously implementing various capital solutions, rolling out a support package totaling VND 40,000 billion, of which VND 20,000 billion is dedicated to SMEs, and the remaining VND 20,000 billion for businesses under the Government’s VND 500,000 billion program. These packages feature preferential interest rates at least 2% lower than usual. Notably, ACB is offering unsecured loans for export businesses, supply chain credit, unsecured overdrafts for SMEs, and long-term credit to help strengthen sustainable competitiveness.

In practice, unsecured loans for export businesses have long been prioritized by many banks, as banks can easily assess export contracts, cash flows, or through letters of credit (L/C). However, one “bottleneck” is the issue of credit limits. Many businesses still struggle because they need large amounts of capital to purchase, process, manufacture, export, or stockpile goods based on price forecasts or seasonal demands, yet the bank-imposed credit limits remain restricted, forcing businesses to rotate capital, collect receivables to pay off old loans, and seek new disbursements within those limits.

“In the near future, banks will expand limits for reputable businesses, especially those operating transparently and in industries where Vietnamese products have strengths and are less affected by tariffs,” said a bank leader.

From the perspective of a bank providing technology ecosystem products and promoting payment solutions, Mr. Ho Van Long noted that VIB recognizes that SMEs also face challenges in digital transformation and financial management. Therefore, the bank supports corporate customers through its VIB Business Card, offering better credit terms, foreign exchange support, and optimal cost management tools.

Overall, Mr. Gareth Parrington assessed that most micro, small, and medium-sized enterprises in Vietnam still rely on credit for development but encounter barriers due to complicated and lengthy procedures and documentation. Although digital platforms for credit approval have appeared, most lending still follows traditional methods. Thus, he expects that with over 40% of SMEs accepting card payments from customers and more than two-thirds recognizing the positive impact of digital payments, integrating digital payment methods into credit provision will help unlock cash flow for businesses.

Nevertheless, to further enhance business access to unsecured bank loans, Mr. Tu Tien Phat believes that it is necessary to improve the legal framework to develop business guarantee funds as a supporting intermediary.

Mr. Nguyen Ngoc Hoa suggested that, regarding local credit stimulus access programs, banks and leading lending institutions need to continue simplifying appraisal and approval processes to reduce the administrative burden on businesses.