WHEN TO APPLY FOR A FOREIGN LOAN?

In the context of global economic integration, borrowing from foreign sources has become a common financial solution for many businesses and organizations in Vietnam. However, to ensure legality and regulatory compliance, it is necessary to register foreign loan. So when is it mandatory for businesses to carry out the procedure for registering foreign loan?

1.         Which loans must carry out procedures for applying for a foreign loan?

For foreign loan not guaranteed by the Government, organizations and individuals shall fully comply with procedures for registration of foreign loan according to regulations.

– Foreign medium and long-term loans.

– A short-term loan is entitled to an extension of the principal repayment period where the total term of the loan is more than 01 year.

– The short-term loan does not have an extension agreement but has outstanding principal (including interest debt entered into principal) at the time of 01 year from the date of the first capital withdrawal, unless the borrower completes the payment of the said principal balance within 30 working days from the date of 01 year from the date of the first capital withdrawal.

Each act, depending on the seriousness of the violation, can be sanctioned from 20 million VND.

2.       Who are the subjects applying for foreign loan?

– The borrower enters into a foreign loan agreement with a non-resident lender.

– The organization is responsible for paying debt directly to the entrusting party in case a credit institution or foreign bank branch signs an entrusted on-lending contract with the entrusting party who is a non-resident.

– The party has the obligation to repay debt under debt instruments issued outside the territory of Vietnam to non-residents.

– The lessee in the financial leasing agreement with the lessor is a non-resident.

– Organizations that inherit foreign loan repayment obligations are subject to registration or registration of changes according to the provisions of this Circular in case the borrower is taking out a foreign loan, it shall divide, split, and consolidation or merger.

3.       How is the order of applying for a loan?

–        Step 1: Prepare an Application for a Foreign Loan Not Guaranteed by the Government

+       In case the borrower has declared loan information on the Website before submitting the application for a foreign loan: the borrower prints the Application from the Website, signs and stamps it;

+       In case the borrower fails to declare loan information on the Website before submitting the application: the borrower completes the Foreign Loan Application in the prescribed form.

– Step 2: Submit your application

An application with a foreign loan application not guaranteed by the Government shall be submitted by post or in person at the competent Loan registration confirmation agency.

Application deadline:

+ 30 working days from the date of signing the medium- and long-term foreign loan agreement;

+ 30 working days from the date of signing the agreement on extension of short-term foreign loans into medium and long-term loans, for short-term loans entitled to extension of the principal repayment period with a total term of more than 01 year,  which the date of signing the extension agreement is within 01 year from the date of the first capital withdrawal;

+ 30 working days from the date the borrower is granted the Certificate of Business Registration, the Establishment and Operation License under specialized laws, the date of signing the investment contract in the form of public-private partnership (PPP contract), the date the parties sign the foreign loan agreement to convert the amount prepared for investment into loan capital (whichever comes later),  applicable to foreign loans arising from the transfer of investment preparation amounts of projects that have been granted Investment Registration Certificates into foreign loans.

+ 60 working days from the date of 01 year from the date of the first withdrawal of capital for:

(i)      The short-term loan is entitled to an extension of the principal repayment period with a total term of more than  01 year, on which the date of signing the extension agreement is after 01 year from the date of the first withdrawal; and

(ii)      The short-term loan does not have an extension agreement but has outstanding principal (including interest debt entered into principal) at the time of 01 year from the date of the first capital withdrawal, unless the borrower completes the payment of the said principal balance within 30 working days from the date of 01 year from the date of the first capital withdrawal.

>> PROCEDURE OF CHANGE ON INVESTMENT PROJECT LOCATION https://linconlaw.vn/procedure-of-change-on-investment-project-location/

>> TERMINATION OF LABOR CONTRACT, EMPLOYEES’ OBLIGATIONS ON NOTIFICATION https://linconlaw.vn/termination-of-labor-contract-employees-obligations-on-notification/

– Step 3: The State Bank of Vietnam refuses/confirms within

+       12 working days from the date of receipt of complete and valid documents of the borrower in case the borrower has declared loan information on the Website;

+       15 working days from the date of receipt of complete and valid documents of the borrower in case the borrower fails to declare loan information on the Website;

+       45 working days from the date of receipt of a complete and valid application from the borrower, in case the loan is denominated in Vietnamese dong, must be considered and approved by the Governor of the State Bank according to the provisions of Clause 3, Article 20 of this Circular.

In case of refusal of the application, a written refusal must be made to confirm the loan registration clearly stating the reason.