Regarding direct lending principles of the Small and Medium Enterprise Development Fund (Fund), Article 15 of Decree No. 39/2019/ND-CP stipulates:

1. The Fund's lending activities are carried out according to the agreement between the Fund and small and medium-sized enterprises, in accordance with the provisions of this Decree.

2. Small and medium-sized enterprises borrowing capital from the Fund must ensure to use the loan capital for the right purpose, repay principal and interest in full and on time as agreed with the Fund.

3. The loan and debt repayment currency are Vietnamese Dong.

In addition to the above three principles, Decree No. 45/2024/ND-CP adds the principle: Enterprises that have received loans from the Fund can be considered for loans for new projects, production and business plans from capital sources of the Fund if the enterprise has repaid all loan principal and interest in full and on time.

This principle is to limit a business from borrowing capital spread across many projects and production and business plans in the same period. At the same time, after the business has fully paid back, it will have enough basis to evaluate the results, effectiveness, ability and actual need for support next time.

Amending and supplementing loan conditions

In addition, Decree No. 45/2024/ND-CP also amends and supplements Clauses 1,2,3, Article 16 on loan conditions. Accordingly:

1. Innovative small and medium-sized startups can borrow capital from the Fund when they meet the following conditions:

a) Meet the criteria for innovative small and medium-sized enterprises as prescribed in the Law on Support for Small and Medium Enterprises and its guiding documents;

b) Have a feasible project and production and business plan that meets the criteria for identifying innovative small and medium-sized startups.

c) Ensure that the equity capital participating in the project, production and business plan is at least 20% of the total investment capital to implement the project, production and business plan and must ensure enough capital to implementing projects, production and business plans;

d) Meets regulations on loan security as prescribed in this Decree.

2. Small and medium-sized enterprises participating in industry clusters are eligible to borrow capital from the Fund when they meet the following conditions:

a) Participate in industry clusters according to the provisions of the Law on Support for Small and Medium Enterprises and its guiding documents;

b) Have feasible production and business projects and plans in the industry or field of the industrial cluster; and etc.