Beijing unveils 14 measures to boost financing for the private economy

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Beijing recently released the "Opinions on Deepening Financial Supply-side Reform and Further Optimizing the Financial Credit Business Environment," including 14 measures to ease financing difficulties faced by private companies. The measures especially target small and micro-sized businesses, helping to address difficulties of access, high bank loan costs, and slow bank lending.

The financing cost for small and micro-sized firms will be further cut down, specifically by lowering interest rates for business loans and the rate of guarantee fees and charges. The aim is to reduce the overall financing cost for small and micro-sized businesses by 0.9 percent point by the end of 2019.

Beijing-based banking institutions will launch mobile lending platforms to streamline loan applications and approval and credit review processes, enabling borrowers to apply for and receive funds quickly and easily. They are also encouraged to offer medium- to long-term business loans customized for small and micro-sized businesses.

Meanwhile, a "white list" of eligible corporate borrowers will be established. Companies that make the list after a loan review process could enjoy expedited services when applying for future loans. 

A revolving line of credit will also be introduced, enabling businesses to have cash available on demand and giving them almost instant liquidity.

Besides, a municipal-level financing guarantee group and a financing guarantee fund of no less than 10 billion yuan (US$1.5 billion) will be set up to encourage more lending to small firms, according to the new measures. 

By the end of 2019, banking institutions in Beijing are expected to secure an increase in the aggregate loan balance of small and micro-sized businesses. The top five Chinese banks are required to add 30% to their small business loan balance at the beginning of the year.

Additionally, to reduce the loan repayment burden on private businesses, financial institutions in Beijing are required to extend loans for corporate borrowers at least one month before they become overdue. Also, non-repayment extension of loans is encouraged to help those businesses in difficulty.

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