Foreign loan application procedure

Foreign loan registration is no longer a strange procedure for both businesses and investors. During the course of project operation/implementation, the Enterprise/Investor may incur additional costs in excess of the contributed capital amount. At this time, businesses can choose to borrow from abroad to have more capital to implement investment projects. However, foreign loans are also strictly controlled by the State Bank. Vo & Associates will provide detailed instructions on the procedure for applying for a foreign loan in this article.

1. Legal basis

Law on Credit Institutions 2024.

Decree No. 219/2013/ND-CP, on management of enterprises’ borrowing of foreign loans and payment of foreign debts without Government guarantee.

Circular No. 08/2023/TT-NHNN on prescribing eligibility requirements for foreign loans without Government’s guarantee

Circular No. 12/2022/TT-NHNN on guidelines for foreign exchange administration in respect of enterprise’s foreign borrowing and foreign debt repayment of enterprises

2. Which loans must register for foreign loans with the State Bank of Vietnam?

According to the content of the article, there will be two types of loans, namely short-term loans (under 01 year) and medium and long-term loans (loan term of more than 01 year). In that case, only medium and long-term loans need to carry out registration procedures for foreign loans.

Specifically, in the medium and long-term loans that need to be registered according to Article 11 of Circular 12/2022, including:

1. Foreign medium and long-term loans, except foreign loans arising from issuance of L/C of credit institutions or foreign bank branches
2. Renewed short-term loans which have more than 01 (one) year of maturity term.
3. Short-term loans which are not covered by any loan renewal contract but remain the outstanding principal owed on the anniversary of the date of first withdrawal of loan proceeds in a full 01 year, except to the extent that borrowers have already paid their principal debt within a permitted duration of 30 days after the anniversary of the date of first withdrawal of loan proceeds in a full 01 year.

3. Documents to be prepared to apply for a foreign loan:

Article 16 of Circular 12/2022/TT-NHNN, specifies the documents that need to be prepared for loan registration, specifically Enterprises/Investors need prepare complete documents as follows:

1. Loan registration form

• If a borrower fills in the loan declaration form on the website: https://qlnh-sbv.cic.org.vn/ before submitting the application for registration of the foreign loan: the borrower shall print out that form from the website, and give their signature and stamp;
• If a borrower fails to fill in the loan declaration form on the website before submitting the application for registration of the foreign loan: the borrower shall complete the application form for registration of foreign loan given in Appendix 01 of Circular 12/2022/NHNN

2. Copy of legitimate dossiers of the borrower: establishment permit, business registration certificate, cooperative or cooperative federation registration certificate and amending documents (if any) and other equivalent documents.

3. Copy or original of written proof of borrowing purposes, including:

• a) As for loans for executing investment projects: Investment certificates, certificates of investment registration or decisions on approval for investment policy as per the investment law and applicable regulations of relevant laws
• b) As for loans for implementing plans for production and business other than investment projects: Plan for use of foreign loans approved by the competent authority as per the Investment Law, Enterprise Law and charter of enterprises, Cooperative Law and charter of cooperatives as well as other relevant legislative documents;
• c) As for loans for restructuring foreign loans of the borrower: Foreign debt restructuring plans of the borrower approved by competent authorities in accordance with the Enterprise Law and charter of enterprises, Cooperative Law and charter of cooperatives as well as other relevant legislative documents;
• d) As for loans Short-term loans whose principal repayment period is renewed which have more than 01 year of maturity term and Short-term loans which are not covered by any loan renewal contract but remain the outstanding principal owed (including outstanding interest included in principal) on the anniversary of the date of first withdrawal of loan proceeds in a full 01 year, except to the extent that borrowers have already paid their principal debt within a permitted duration of 30 days after the anniversary of the date of first withdrawal of loan proceeds in a full 01 year: Report stating that use of short-term loans conforms to regulations on eligibility conditions for short-term foreign borrowing (enclosed with supporting documentation such as plan for use of foreign loan of the borrower, plan for restructuring of foreign loan);
• e) Types of documents prescribed in Points a, b and c of shall not apply to the loans of state-funded commercial banks in which the State Bank is a controlling owner representative and have been approved by the State Bank in accordance with regulations on management and use of state funds in enterprises

4. Copy of foreign document and Vietnamese translation of foreign loan agreements and agreements on renewal of short-term loans into medium-term or long-term loans (if any).

5. Copy of foreign document and Vietnamese translation of written guarantee commitment (letter of guarantee, contract of guarantee or other commitments) in terms of secured loans.

6. The copy of the competent authority’s written approval for foreign loans in accordance with laws on task and authority assignment in relation to implementation of authority, responsibilities and obligations of the state or state representatives in state-funded enterprises in accordance with management and use of state funds in enterprises for borrowers being state-owned enterprises (not applicable to loans of commercial banks in which the State Bank is a controlling owner representative and have been approved by the State Bank in accordance with regulations on management and use of state funds in enterprises).

7. Report on compliance with regulations of the State Bank on credit limits and safety ratios of credit institutions, foreign bank branches in accordance with regulations on requirements for conventional foreign loans on the latest 3-month-end date prior to the signing date of loan agreement until the latest month-end date prior to the date of submission of full application for registration of foreign loan using the form No. 02 issued herewith and documents proving that the borrower falls in the case specified in Point c Clause 2 Article 16 of the Circular No. 08/2023/TT-NHNN prescribing eligibility requirements for foreign loans without the Government’s guarantee in the event that borrowers are credit institutions or foreign bank branches.

8. An account service provider’s confirmation required as to the withdrawal of loan proceeds, repayment of principal and interest until the date of loan registration (if the borrower opens a foreign loan account at the account service provider) in the following cases:

• a) If foreign borrowing is to serve the purpose of restructuring foreign debts: a statement given by the borrower’s account service provider on withdrawal of loan proceeds and repayment of debts incurred from foreign loans to be restructured by other foreign loans is required;
• b) If foreign investors’ disbursed fund transmitted to Vietnam which have already been used for meeting pre-investment expenses are converted into medium-term or long-term foreign loans of directly foreign-invested enterprises in accordance with prevailing relevant laws on foreign direct investment in Vietnam: Copy of foreign document and Vietnamese translation of a confirmation of collection and spending transactions relating to loan origination given by the creditor’s account service provider is required;
• c) As for loans Short-term loans whose principal repayment period is renewed which have more than 01 year of maturity term and Short-term loans which are not covered by any loan renewal contract but remain the outstanding principal owed (including outstanding interest included in principal) on the anniversary of the date of first withdrawal of loan proceeds in a full 01 year, except to the extent that borrowers have already paid their principal debt within a permitted duration of 30 days after the anniversary of the date of first withdrawal of loan proceeds in a full 01 year: a statement given by the borrower’s account service provider on withdrawal of loan proceeds and repayment of an initial short-term foreign loan is required;
• d) Where the borrower fails to provide such a confirmation made by the account service provider as specified in points a, b, c hereof since:

The account service provider shuttered business or suspended operations before the borrower alters another account service provider or the withdrawal of loan proceeds and repayment of the foreign loan are not required to be done via a foreign loan account as per Article 34 hereof;

The borrower chooses one of the other documents proving the withdrawal of loan proceeds and loan repayment as follows: a copy of the audited or reviewed financial statement with information proving that the borrower has received the loan amount, outstanding debt up to the time of requesting the State Bank to confirm registration of foreign loan; copy of foreign document and Vietnamese translation of the written certification of the overseas commercial bank where the borrower opens and uses a foreign currency account abroad to withdraw loan proceeds and repay the loan; copy of foreign document and Vietnamese translation of the letter of confirmation from an overseas bank about the amount of money the creditor has directly paid to the beneficiary being a non-resident for the provision of goods and services under the goods and services sale contract with the resident being the borrower.

9. Documents or invoices indicating legally distributed Vietnam-dong profits gained from direct investments of the creditor who is the foreign investor making the capital contribution to the borrower, and a statement of account service providers on distribution and transmission of profits to the home country of the creditor are required to serve as evidence of disbursement of foreign loans in respect of foreign borrowing in Vietnam dong in accordance with prevailing regulations on conditions for foreign borrowing in Vietnam dong.

4. Registration authority for foreign loans:

Article 20 of Circular 12/2022/TT-NHNN specifies the authority to certify foreign loans:

• The State Bank (Department of Foreign Exchange Management): in respect of loan proceeds of more than 10 million USD (or other equivalents);
• State Bank branches of provinces where borrowers’ head offices are located: in respect of loan proceeds of up to10 million (or other equivalents).

5. Deadline for loan application submission:

The borrower must submit the application within 30 working days from the following time:

1. For foreign medium and long-term loans: The date of signing the medium or long-term foreign loan agreement
2. The Short-term loans whose principal repayment period is renewed which have more than 01 year of maturity term: The date of signing the agreement to renew the foreign loan agreement from short-term to medium- or long-term for these loans in which the signing date of extension is within 01 year from the date of first withdrawal of loan proceeds.
3. The foreign loans arising from the transfer of the investment preparation amount of the projects that have been granted an investment registration certificate into foreign loans: the date on which the borrower is granted the Certificate of Business Registration, the License for establishment and operation under special laws, the date of signing the public-private partnership (PPP) investment contract, the date on which the parties sign the foreign loan agreement to convert the investment preparation amount into loans (whichever is later)

The borrower must submit the application within 60 working days after the anniversary of the date of first withdrawal of loan proceeds in a full 01 (one) year:

• The loans specified in clause 2 Article 11 of Circular 12/2022/NHNN in which the signing date of renewal is after 01 years before the date of first withdrawal of loan proceeds;
• The loans stipulated in clause 3 Article 11 hereof.

6. Time limit for the State Bank to issue a written confirmation of the loan

• 12 working days of receipt of valid and sufficient dossiers from borrowers in the event that borrowers filled in the loan declaration form on the website;
• 15 working days of receipt of valid and sufficient dossiers from borrowers in the event that borrowers failed to fill in the loan declaration form on the website;
• In the event of rejecting confirmation of loan registration, the State Bank must give written explanation for such rejection.

Notes on the deadline for foreign loan application submission:

Because activities related to foreign loans are strictly managed by the State Bank. As a result, foreign loan registration must be completed on time, as specified in “Section 5. Deadline for loan application submission in the Article.” In case the Enterprise/Investor violates the loan registration deadline, the organization may be fined up to VND 60,000,000. According to the provisions of Decree No. 340/2025/ND-CP at point g, Clause 3, Article 27 and point a, Clause 3, Article 3 on penalties for administrative violations in monetary and banking sector.

The information provided above is provided by Lawyers for the purpose of not consulting and not consulting opinions; Vo & Associates is not responsible for any circumstances.

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