Guidance on lending to employers to pay work suspension wages for their employees due to the effects of the Covid-19 pandemic

(VBSP News) Pursuant to resolutions of the Government on measures to support people facing difficulties caused by the Covid-19 pandemic and implementing policies to support people facing difficulties due to the Covid-19 pandemic, VBSP’s General Director issued Document No. 5446/HD -NHCS dated October 20, 2020 to instruct on lending to employers to pay work suspension wages for the employees. 

VBSP has timely provided a Corona emergency loan scheme to support businesses and employers that have been affected by COVID-19

Lending conditions

Employers (hereafter called the customers) will be eligible for taking up this kind of loan if they meet the following requirements:

1. Employing laborers who have taken part in social insurance payments but were forced to stop working for at least one month between April 1 and December 31, 2020;
2. Having their revenue drop by at least 20 per cent in the first quarter of 2020 or in the quarter prior to the lending approval compared to the corresponding period in 2019;
3. Not having bad debts at credit institutions and foreign bank branches as of December 31, 2019.

Lending objective: The customers will use the loan to fund work suspension payments for their laborers due to the impact of COVID-19.

Lending volume, interest rate, and duration

1. Lending volume is maximally one month per customer equalling 50 per cent of the regional minimum wage times the number of laborers facing work suspension. Each customer can take up a loan for at most three months during the period of April 1-December 31, 2020;
2. Lending interest rate: zero per cent per year. Overdue debt interest rate: 12 per cent per annum;
3. Lending duration: Negotiable but not exceeding 12 months since the date of disbursing the first loan;
4. The customers do not need to present collateral;
5. VBSP and its branch offices directly provide the loans to customers.

Loan approval and disbursement

1. No later than the fifth day every month, customers need to submit their lending record to VBSP or its member units. In the next five working days, VBSP or member units must evaluate the lending records and inform customers of the results. In case the document is rejected, VBSP or member units need to inform the customers as to the reason.
2. Disbursement
3. Based on contract, VBSP or member units disburse loans to customers through account transfer;
4. If the customers require loans to fund suspension payments for their employees for the months from April to October 2020 in one time, VBSP or member units will use the customers’ lending records as a basis to approve the applications, sign credit contracts, and carry out capital disbursement one time only;
5. VBSP and member units shall carry out capital disbursement until January 31, 2021.

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