LENDING TO BUSINESS AND PRODUCTION HOUSEHOLDS IN DISADVANTAGED AREAS

* Target clients:

- Households as stipulated in the Civil Code (including business farming households) who are non-poor (hereinafter referred to as borrowers) undertaking business and production activities in disadvantaged areas.

- Master of a household is the representative to take responsibility for conducting transaction with VBSP in borrowing and principal and interest repayment.

* Lending conditions:

- Borrowers must have feasible projects or business/production plans which  are certified by the local Commune People’s Committee.

- Borrowers must have full civil capacity.

- Borrowers have legal residence at the locality of implementation of the projects/business or production plans .

* Loan size:

- Maximum loan size for a business and productive household is VND 30 million.

- In some specific cases, loan amount can be over VND 30,000,000 to under VND 100,000,000 if borrowers satisfy 3 conditions mentioned above and have owner capital (including: material values, land using right license, labors, capital) of 20% at the minimum of total capital demand for the projects or business and production plans; commit using assets generated from the loans as loan guarantee.

- The formula to define loan size:

Loan size = Capital demand of the project/plan – owner capital contributing to implementation of such project/plan.

* Lending interest rate:

- 10.8%/year for loans taken before 1 May 2009.

- Overdue rate is equal to 130% of the normal interest rate.

- From 1 May 2009 to 31 December 2011, the interest rate is 6.8%/year.

* Loan term:

- As applied to the lending to poor households.

* Lending methods:

- Direct or indirect via mass organizations.