VCCI: Enterprises are ‘thirsty for capital’ because of collateral barriers

Lack of collateral makes it difficult for businesses to access capital, requiring the banking industry to shift to a cash flow lending model.

The information was presented at the seminar “Cash flow management and unlocking capital sources for businesses in the new context”, on July 3.

According to the PCI 2025 Report of the Vietnam Confederation of Commerce and Industry (VCCI), access to capital is still a major barrier for businesses. Specifically, more than 21% of businesses consider access to finance as the biggest difficulty, higher than the global average (17.8%) and the East Asia-Pacific region (15.7%).

Up to 8.2% of businesses cannot access credit or do not dare to apply for loans due to unfavorable conditions. About 18% of other businesses only have access to part of their capital needs.

Collateral is currently the biggest barrier for borrowers, according to the PCI 2025 report. About 75% of businesses participating in VCCI’s survey reflected that they cannot borrow capital without collateral.

“The rate of loans requiring collateral in Vietnam is up to 93.5%, much higher than the global average, as well as regional countries such as Malaysia and Thailand,” said Mr. Ho Anh Tuan, Deputy Director of VCCI Central – Central Highlands.

This situation shows that credit institutions still prioritize tangible assets, while lending models based on cash flow or business plans have not been widely deployed.

Besides, the arising cost pressure also makes it difficult for businesses. The survey showed that 56.3% of units were subject to stricter credit conditions and interest rates than large enterprises and state-owned enterprises. In addition, 46.1% of businesses had loan terms changed in an unfavorable way and 44.5% still had to pay “incentives” to get disbursement.

Complicated documentation procedures also make it difficult for businesses to access capital. VCCI’s survey recorded that 45% of businesses rated loan procedures as troublesome. Many businesses report the situation of having to settle old loans according to commitments before receiving new loans, but then the application is stopped or the limit is reduced.

According to Mr. Ho Anh Tuan, complicated procedures and information gaps have created a vicious cycle, making it impossible for many businesses to access capital from the first step.

Faced with the above situation, businesses recommend that banks should gradually switch from a model based on collateral to evaluating actual business efficiency and reputation.

According to Mr. Duong Quoc Anh, former Deputy Chairman of the National Assembly’s Economic Committee, the policy of shifting to assessing the financial capacity and feasibility of the project was set out many years ago, but actual implementation is still difficult due to market fluctuations and increased credit risks. He believes that the most important thing today is that banks need to clearly understand the capacity and cash flow of businesses. On the contrary, businesses must clearly understand the appraisal regulations of credit institutions.

Sharing the same opinion, Mr. Le Thanh Quy Ngoc, Acting General Director of VietBank, said that the most important keyword is “understanding customers”. To do this, businesses must proactively transparent information about production activities, financial situation and capital use purposes.

“If an enterprise has a clear operating foundation, transparent cash flow and good business history, lending unsecured or without collateral is no longer a big problem,” Mr. Ngoc said.

VietBank representatives recommended that small and medium-sized enterprises need to change their thinking, use capital for the right purpose and choose a loan term suitable to the cash flow cycle. At the same time, businesses also need to gradually separate personal finances from corporate finances, improve the accounting system and increase payments through bank accounts with transparent transaction history.