More than six months have passed since the National Financial Regulatory Administration (NFRA) and the National Development and Reform Commission mobilized efforts to establish a coordinated financing mechanism for small and micro enterprises. Recent research shows local task forces have been actively exploring solutions by guiding financial institutions, collaborating with local governments, and engaging financing guarantee companies to address financing challenges through increased credit allocation, tailored support, and improved risk-sharing mechanisms.
Latest NFRA data reveals that banks have extended over 18 trillion yuan in new credit to businesses recommended through this coordination mechanism.
Expanding Credit Supply
Task forces in Tianjin, Shandong, and Xinjiang have directed banks to increase unsecured loans for small businesses. In Tianjin’s Binhai New Area, a tech firm specializing in heart failure treatment received 10 million yuan through an innovative credit scoring system. Shouguang City’s vegetable cooperative obtained 500,000 yuan within a day using transaction data as collateral, while Xinjiang’s first “climate loan” of 5.53 million yuan was approved for a wind energy company using meteorological data in credit evaluation.
By April, the mechanism had facilitated visits to over 70 million small businesses, with nearly 900,000 included in recommended lists. Banks extended 18 trillion yuan in new credit and disbursed nearly 14 trillion yuan in fresh loans to these enterprises.
Tailored Solutions for Specific Challenges
Task forces provide customized assistance for issues like property rights disputes and financing rejections. In Beijing’s Chaoyang District, a construction company secured 10 million yuan after authorities clarified land ownership documentation. In Yunnan’s Yun County, a natural gas company obtained 5 million yuan at preferential rates after banks reassessed risks related to minor shareholder freezes.
“This mechanism enhances bank-enterprise communication, enables collaborative financing solutions, and strengthens risk management through assessment systems,” said Bai Wenxi, Deputy Chairman of the China Enterprise Capital Alliance.
Strengthening Risk-Sharing Frameworks
Industry experts emphasize the need for improved credit systems. “Information asymmetry remains the core challenge,” noted Fu Yifu, researcher at Sushang Bank, advocating for third-party credit rating services to reduce financial institutions’ information costs.
In Hunan’s Wangcheng District, an environmental tech company received 10 million yuan through a multi-party risk-sharing model involving patent valuation (40% guarantee coverage plus 20% provincial compensation). Experts suggest complementing risk-sharing with institutional incentives, including adjusted performance metrics and higher non-performing loan tolerance for small business financing.
Fu Yifu proposed establishing dedicated SME financial service departments and expanding direct financing channels through multi-level capital markets and development funds to comprehensively address financing difficulties.
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