Tet holidays and festivals are great occasions for individuals, small household businesses and enterprises to earn money and drive their business. However, business expansion requires them to leverage funds from banks. Below are banking experts’ advice when a small household business who has a market stall wishes to apply for loan to expand his/her business.
Selecting a suitable bank is a critical step in small household businesses’ plans. Customers had better to carefully consider and ask themselves such questions as: What do I need? What do I want?
The following also need to be considered: Each bank on the market applies a different policy for its customers. Depending on target customers, each bank will apply different target services, procedures, interest calculation methods, fees and penalties. This, therefore, needs careful consideration from customers.
Loan term is also very important when you need a loan for your business expansion. If the loan term is too long, you will have to “suffer” an unnecessary amount of interest. On the contrary, if the loan term is too short, the repayment pressure can affect your selling price and business performance.
Banking experts advise if you need a loan for your business, then repayment amount should only account for 30-40% of your total monthly income, the rest should be spent on personal stuffs and reinvestment. If this ratio is broken, you will most likely have to take a new loan for your old debt repayment.
Interest rate is what you should pay your most attention to when getting a loan. Just a small difference in the interest rate can make a huge change in your interest amount. Please keep in mind the following in finding a preferential loan package:
Firstly, there are two forms of interest calculation: based on reducing principal balance and based on the original balance. Many banks take advantage of this to announce extremely low interest rates, which, in fact, are calculated on original balance, making customers suffer a huge interest amount.
Secondly, if you are eligible to business support policy, your interest burden will be greatly reduced. Currently, interest rates for medium and long-term VND loans in the market range between 9-11%.
Under bank’s considerable support for interest rates and loan terms, your business expansion will become much easier.
|If you're wishing to apply for business loan but still confusing about loan procedures, please go to BIDV for further advice and get a loan easily. As the largest bank in Vietnam in terms of total assets, BIDV owns a wide network with more than 1,000 transaction points nationwide. BIDV also offers various incentives suitable for individual customers, households and household businesses. Please click here for more information.|