Household business is a business model chosen by many individuals. What do business households need to do to get a bank loan? What are the conditions for business households to get a bank loan? LSX Lawfirm wil help you know more anout conditions for business households to borrow bank loans in Viet Nam in the following article.
Law on Enterprises 2020
What is a household business?
Household business is not a type of business . The Law on Enterprises also does not have a specific definition of household business. Business households are regulated in Decree 01/2021/ND-CP.
Accordingly Clause 1, Article 79 of Decree 01/2021/ND-CP : “ Business household is registered to be established by an individual or members of the household and is responsible with all his/her assets for business activities. household business. In case household members register business households, they shall authorize one member to act as the business household representative. Individuals registering business households, the person authorized by household members to act as the business household representative is the owner of the business household. ”
Besides, business household registration is carried out at the business registration office of the district where the business household is located.
Who can get a loan from a bank?
Accordingly the provisions of Clause 3, Article 2 of Circular 39/2016/TT-NHNN stipulating lending activities of credit institutions and foreign bank branches to customers, customers borrowing capital at credit institutions consists of:
+ Firstly, a legal person established and operating in Vietnam, a legal person established in a foreign country and lawfully operating in Vietnam;
+ Secondly, 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, people who are using the type of household business who want to get a loan from a bank only borrow in the form of an individual owner of the business household.
Conditions for business households to borrow bank loans
In order for an individual head of a business household to be considered by the Bank and decide on a loan, this individual must first meet the conditions for a loan in Article 7 of Circular 39/2016/TT-NHNN as follows:
+ Firstly, the individual owner of a business household must have full civil act capacity as prescribed by law.
+ Secondly, emand for loans to use for lawful purposes.
+ Lastly, have a feasible plan to use capital, Have the financial ability to repay the debt.
Note: the bank will not lend to the owner of the household business to carry out business investment activities in the lines of business that are ban by law from doing business; to pay expenses, meet the financial needs of transactions, conduct prohibited by law; buy and use goods and services in industries and trades prohibited by law from business investment; to buy gold bars; repay the credit extension at the lending credit institution, to repay the foreign loan. Because these are capital needs Banks do not have right to lend.
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The maximum short-term lending interest rate in Vietnam dong as prescribed in Clause 2; Article 13 of Circular No. 39/2016/TT-NHNN dated December 30; 2016 is; as follows:
Firstly; credit institutions; foreign bank branches (except People’s Credit Funds and Microfinance Institutions) shall apply the maximum short-term lending interest rate in VND of 5.5%/year.
Secondly; people’s credit funds and microfinance institutions shall apply the maximum short-term lending interest rate in VND of 6.5%/year.
Thus; depending on each lending institution; the maximum short-term lending interest rate in VND is 5.5%/year or 6.5%/year.