What is a Business Loan? Conditions, Documents, and Procedures for Borrowing

Business loans are a financial solution chosen by many businesses and individuals to expand, invest, or maintain their operations. So, what exactly is a business loan? What are the conditions, documents, and procedures for borrowing for business purposes? Let's explore the detailed information and knowledge with VPBank in this article.

1. What is a Business Loan?

A business loan is a financial solution that helps individuals or businesses raise the necessary capital to start or expand their business operations. This form provides an opportunity to access flexible capital, meeting financial needs at each stage of a household business or small enterprise's development.

To obtain a loan, borrowers typically need to provide collateral. These assets play a key role in helping the bank assess the risk level and determine the loan limit. Collateral can include real estate, vehicles, or other valuable papers.

Today, banks have designed various loan packages tailored to different business purposes. You can choose from options like supplementing working capital, purchasing goods, or upgrading facilities. This helps customers easily find suitable loan solutions to optimize their business operations.

2. Conditions for Obtaining a Business Loan from a Bank

To have a business loan approved by a bank, customers must meet certain conditions. Below are the specific requirements for each type of borrower:

2.1. For Businesses

Companies seeking business loans must meet the following conditions:

• Legal Entity: The business must be legally registered in Vietnam and possess all necessary business licenses. It must operate in an industry that does not violate the law or fall under the state's prohibited list.

• Transparent Financial Standing: Provide financial statements for the most recent 1-2 years (if applicable). Demonstrate stable revenue, profits, and repayment capability.

• Feasible Business Plan: Submit a detailed capital utilization plan, clearly stating the loan's purpose (e.g., expanding production, purchasing inventory, upgrading equipment, etc.).

• Collateral: The business needs to provide collateral such as real estate, inventory, or valuable papers. Some banks accept unsecured guarantees if the business has a high credit reputation.

• Good Credit History: No bad debts or overdue debts at any credit institution.

Enterprises need to ensure the stability and continuity of their business operations <button class="text-token-text-secondary hover:bg-token-bg-secondary rounded-lg" aria-label="Copy" aria-selected="false" data-testid="copy-turn-action-button" data-state="closed"></button><button class="text-token-text-secondary hover:bg-token-bg-secondary rounded-lg" aria-label="Good response" aria-selected="false" data-testid="good-response-turn-action-button" data-state="closed"></button><button class="text-token-text-secondary hover:bg-token-bg-secondary rounded-lg" aria-label="Bad response" aria-selected="false" data-testid="bad-response-turn-action-button" data-state="closed"></button><button class="text-token-text-secondary hover:bg-token-bg-secondary rounded-lg" aria-label="Read aloud" aria-selected="false" data-testid="voice-play-turn-action-button" data-state="closed"></button><button class="text-token-text-secondary hover:bg-token-bg-secondary rounded-lg" aria-label="Edit in canvas" aria-selected="false" data-state="closed"></button><button id="radix-«r3po»" class="cursor-pointer text-token-text-secondary hover:bg-token-bg-secondary touch:px-2.5 h-[30px] rounded-md px-1.5" type="button" aria-haspopup="menu" aria-expanded="false" data-state="closed"></button><button class="text-token-text-secondary hover:bg-token-bg-secondary rounded-lg" aria-label="Share" aria-selected="false" data-state="closed"></button>

 

 

2.2. For Household Businesses

Household businesses can also access and obtain unsecured business loans from banks, with simpler conditions compared to enterprises:

• Legal Business License: The household business needs a business registration certificate or a confirmation from local authorities regarding its actual business operations.

• Fixed Business Location: Banks often require household businesses to demonstrate a clear and stable business location for a certain period.

• Proof of Income: Provide documents or vouchers proving regular revenue, such as sales invoices, income/expense ledgers, etc.

• Collateral: Collateral can be real estate, vehicles, or assets formed from the borrowed capital (e.g., goods, machinery).

• Clear Purpose for Capital Use: Detail the loan plan, such as purchasing goods, expanding the store, or buying business equipment.

• Credit History: The household business must ensure no bad debts or overdue debts with previous banks.

3. Outstanding Features and Benefits of VPBank Business Loans

Borrowing for business at Vietnam Prosperity Joint Stock Commercial Bank (VPBank) offers numerous outstanding features and benefits. The bank can effectively support individuals and businesses in developing their business operations.

3.1. Outstanding Features of Business Loans

 

• Flexible Loan Limits: VPBank offers diverse loan packages tailored to each customer's needs. For unsecured business loans, limits can reach up to VND 200 million, while secured business loans can go up to VND 20 billion.

• Flexible Loan Terms: Loan durations are designed to match customers' financial capabilities and business plans, extending up to 60 months for unsecured loans and 15 years for secured loans.

• Competitive Interest Rates: VPBank applies preferential interest rates, helping to reduce borrowing costs for customers. Secured loan interest rates can be as low as 4.19%/year.

• Simple Procedures, Fast Disbursement: The loan application process is optimized, allowing customers to complete procedures quickly and receive funds in a short time.

Business loan products at VPBank with many extremely attractive incentives

3.2. Benefits of Business Loans at VPBank

• Timely Capital Access: Business loans from VPBank help customers quickly boost capital to immediately proceed with their planned business activities.

• No Collateral Required (for unsecured loans): Customers can access funds without needing collateral, suitable for individual business owners and household businesses.

• Flexible Repayment Methods: Customers can choose to repay interest and principal monthly, quarterly, or as agreed, helping to manage finances effectively.

• Support for Diverse Industries: VPBank offers loan packages suitable for various business sectors such as retail, F&B services, and small-scale manufacturing, making it easy for customers to choose the right loan product.

4. Required Documents and Files for VPBank Business Loans

If you wish to apply for a small business loan at VPBank, you'll need to prepare the following documents:

4.1. Personal Legal Documents

Personal legal documents are essential for verifying the borrower's identity and information. Required documents include your ID card (CMND), Citizen Identity Card (CCCD), or Passport (copy with original for verification), and household registration book or temporary residence book to confirm your address. For married or single customers, a marriage certificate or confirmation of marital status is also required.

4.2. Household Business Legal Documents

Household business legal documents help the bank assess the legality and transparency of business operations. Household businesses need to provide a business registration certificate and a business location confirmation issued by local authorities. If the business sector requires special licenses (e.g., healthcare, F&B services), customers must also prepare these permits.

4.3. Loan Purpose Documents

Loan purpose documents are crucial for the bank to understand how the loan will be used. Customers should prepare a detailed business plan, clearly stating the purpose of capital use, such as purchasing inventory, expanding facilities, or investing in equipment. Additionally, include business contracts (if any), invoices, or quotes for goods and services related to the loan need.

4.4. Proof of Income Documents

Proof of income documents are vital evidence of the customer's repayment capability. For businesses, financial statements from the last 1-2 years are required. Household businesses can submit income/expense ledgers or other documents showing cash flow from business operations.

If the customer has income from other sources, such as additional employment, a labor contract or pay stubs should be provided. For secured loans, customers need to provide asset ownership documents such as a land use rights certificate ( sổ đỏ ) or vehicle registration papers.

5. Bank Business Loan Procedures

The procedure for obtaining a business loan at Vietnamese banks typically involves the following steps:

Step 1: Prepare Documents Customers need to prepare all necessary documents, including personal legal documents, household business/enterprise legal documents, loan purpose documents, and proof of income documents. Ensure all documents are transparent, accurate, and notarized if required.

Step 2: Submit Documents to the Bank Customers can submit their documents at a bank's transaction counter or apply online through digital platforms (if supported by the bank). A bank officer will then review and accept the application.

Step 3: Application Appraisal The bank will appraise the collateral (if any), assess the feasibility of the business plan, and check the customer's credit history. This appraisal process can take 1-7 business days, depending on the loan amount and the bank's policies.

Step 4: Loan Approval After the appraisal, the bank will notify you of the loan approval decision, including the loan limit, loan term, applicable interest rate, and any accompanying terms.

Step 5: Sign Contract and Disbursement If you agree to the terms, you will sign the loan agreement. Subsequently, the bank will disburse the loan amount via your account or another agreed-upon method.

6. Important Considerations Before Applying for a Bank Business Loan

To ensure a smooth and quick business loan application process at banks, please note the following key points:

• Clearly Define Your Needs and Financial Capacity: Before borrowing, you should identify the purpose of the funds and calculate your repayment ability based on your business income. Avoid borrowing beyond your financial capacity to limit risks.

• Prepare Documents Carefully: A complete, transparent, and consistent application package will expedite the approval process. Importantly, information on documents such as collateral, business plans, and personal identification must match.

• Understand Loan Conditions and Interest Rates: Thoroughly research the loan conditions, interest rates, and related fees (processing fees, early repayment fees, etc.). Compare offers from different banks to choose the most suitable loan package.

• Pay Attention to Your Credit History: Ensure you do not have any bad debts or overdue debts at any credit institution, as this can affect your loan approval chances.

• Choose a Reasonable Loan Term: Select a loan term that aligns with your business plan to avoid financial pressure during repayment.

• Seek Bank Consultation: If you have any questions, contact the bank directly for clear advice on conditions, procedures, and associated benefits.

As you can see, business loans offer a financial opportunity to effectively develop your business operations. However, thoroughly preparing the necessary conditions, documents, and understanding the procedures are crucial steps for success. For detailed consultation and prompt support, please contact our hotline at 1900.54.54.15 or visit www.vpbank.com.vn.