He had to borrow from a loan shark at a very high interest rate to pay off a VND10 billion ($433,000) loan to a bank.
"I borrowed more than VND10 billion from four people at an interest rate of more than 7.5 percent a month or over 91 percent a year," he said.
When Hung delayed interest payment and was unable to pay the principle he and his family were threatened by loan shark lenders.
He had to sell off his factory to pay the debt, which had zoomed to VND30 billion.
Hung's company is only one of many SMEs in Vietnam borrowing from the informal market and getting caught in high interest rate traps.
Dau Anh Tuan, head of the Vietnam Chamber of Commerce and Industry’s (VCCI) legal department, said 87 percent of enterprises said banks required them to have collateral for loans.
Banks refused to lend as the firms' reputation is not enough to be a guarantee for the loans, he said.
According to the 2016 VCCI Provincial Competitiveness Index, 52 percent of businesses borrow from banks, and the rest from relatives, friends or loan sharks.
According to the central bank's estimate, the total amount of "black credit", as lending by the informal credit sector is known, is around VND2.5 trillion ($108 million).
Faced with a situation of businesses and individuals having to borrow from loan sharks and others at usurious interest rates, the State Bank of Vietnam has just announced a credit package of VND5 trillion ($216 million) to be routed through state-owned Agribank to serve their immediate needs and bring them into the formal credit sector.
The central bank’s Deputy Governor, Dao Minh Tu, has instructed Agribank to quickly disburse loans from this package, especially in rural areas.
He said the lender should have very simple conditions and procedures and quickly approve the loans.
"The lending mechanism must be fast - it should be reviewed in one day - and the maximum loan amount is around VND30 million ($1,294)."