by Hu Hongjun

China Construction Bank (CCB) recently cooperated with Alibaba.com, one of the leading domestic e-commerce enterprises, launching credit loan services for numerous small-and medium-sized enterprises (SMEs).

According to the agreement reached by both parties, a green passage will be opened on Alibaba.com, allowing quality customers to apply bank loans and financing projects through the website. And the credit score of domestic e-commerce enterprises on the website will become one of the bases for their loans in CCB.

Experts said that the formal launch of this passage would break the long-standing financing bottleneck for domestic SMEs. It has been revealed that the activities will be firstly carried out in the SME-intensive areas, Hangzhou, Zhejiang, and then expand to other provinces. The first batch of 100 enterprises will get "Personal Operation Loans" and "Quick Finance". The amount of the loans ranges from RMB100, 000 to RMB10 million or more.

Data shows that over 90 percent of China's enterprises are SMEs. They often encountered problems of funds shortage during the development. As many SMEs just start their development with low market share, they cannot meet bank's loan requirements on assets-liability ratio, working capital ratio, the inventory assets ratio and others, thus their loan applications are often denied by banks.

In the absence of mortgages and guarantees, bank loan depends on the enterprise's credit. However, the credit system in China has not been established completely today, so there lacks a platform to communicate banks and enterprises, and no credit relationship can be formed.

Having cooperated with Alibaba.com, CCB will provide specially to "trust pass" and "China suppliers" members on Alibaba.com back-to-back loans, including "Personal Operation Loans" and "Quick Finance" products. The top-ceiling amount of beneficial members will be 100.

As to the reason why firstly choose the excellent credit enterprises in online transactions, the both sides believed that there were potentially many quality loan customers among the SMEs groups, and Alibaba.com could make use of its own trading platform strength to help banks control their risks, weakening the risk and cost constraints for bank loaning.

Alibaba.com has established independent credit records recently for each "trust pass" member and "China suppliers" member. Especially for "trust pass" members, whose credit records are formulated by multiple dimensions, including different contents and evaluation criteria from front-end and back-end.

The longest credit record in the database has lasted for six years, containing both certifications from authorities and real-time interactive on the web. The business behaviors can be unfolded from different angles, such as the traditional third-party certification, the feedback and opinion from cooperators, the activity records on Alibaba.com, and so on.

The above information will be submitted to CCB after being organized and collated while the enterprise member applies for loans. The CCB will consult the credit records provided by Alibaba.com to evaluate the qualification of the enterprise. The credit records will have a direct impact on the bank's assessment results, and even directly determine whether the bank will lend funds to the enterprise. It will reduce the bank's lending costs and enhance the possibility and efficiency of loans for enterprises to a certain extent.

Pent Yijie, Vice President of Alibaba.com, told reporters that some loan barriers which had been troubling SMEs over the years would be eliminated after the cooperation between the two sides. For instance, the traditional model of rating and credit granting process would be omitted, the loan process for enterprises would be streamlined and the lending speed would be accelerated. For another example, "Personal Operation Loans" would allow business owners to obtain loans for the development of enterprises with their personal assets mortgage, thus loosen the restrictions on the concept and the usage of loans, facilitate enterprises to use the loans.

To avoid appearing bad debts among the recommended business customers, Alibaba.com will gradually establish credibility system to combat against lacking trust and rise corporate default costs. Peng Yijie revealed that Alibaba.com was considering with CCB to establish risk control mechanisms for credit risks pre-estimating before loaning, credit risk monitoring during loaning and credit risk treatment after loaning, as well as to punish the breach of faith.

For Alibaba.com, Peng Yijie admitted that Alibaba.com was trying to integrate SMEs' sales centers, personnel centers, technology centers, payment centers and financial centers into a Alibaba.com e-commerce platform. To help SMEs solving their financial problems would also become one of Alibaba.com's responsibilities. Meanwhile, by providing more characteristic services to SMEs, Alibaba.com would also benefit from the rapid development of China SMEs to gain more market opportunities.