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Loan criteria eased for small businesses
Last Updated: 2018-06-21 07:28 | China Daily
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The central government will roll out a series of incentives to make financing more accessible and affordable for small and micro businesses to promote cost-cutting in the real economy, the State Council's executive meeting chaired by Premier Li Keqiang decided on Wednesday.

It was pointed out at the meeting that China will maintain its current prudent and neutral monetary policy. The government will work to keep liquidity sufficient and appropriate to maintain financial stability, strengthen policy coordination to boost market confidence and ensure the economy performs within a reasonable range.

A series of fiscal, tax and financial incentives will be put in place to help small and micro businesses with financing. The central bank will work with commercial banks to ease lending conditions for small and micro businesses. Evaluation criteria for financial institutions will be improved to ensure that businesses with a credit quota of up to 10 million yuan ($1.55 million) will enjoy faster loan growth year-on-year than other types of credit recipients.

From September 1 this year to the end of 2020, the credit quota for small and micro businesses with loans that are eligible for VAT exemptions on interest revenues will be raised from 1 million to 5 million yuan. Meanwhile, the State financing guarantee fund will cover no less than 80 percent of the financing guarantee for small and micro businesses.

Monetary tools will be applied to raise credit support for small and micro businesses. Targeted cuts in banks' reserve requirement ratios and other monetary policy tools will be used to boost credit supply to small and micro businesses. Also, loans of businesses with credit quotas of less than 5 million yuan can be included as qualified collateral for midterm lending facility, easing their ability to borrow.

"The issue of a lack of affordable financing for small and micro businesses must be taken seriously," Li said, "The mentality that big banks can only serve big businesses must be rejected. Financial services for small businesses and individuals must be improved."

This is the third time since the new government took office in March that the State Council put lowering small and micro businesses' financing costs on the agenda of a weekly executive meeting.

"Small and micro businesses are leading job providers, and many of them have strong potential for growth. Their robust development will help achieve high-quality growth and improve people's well-being," Li said.

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