Eight Departments Join Forces for 23 Measures to Boost Small Business Financing
Preface
On May 21, eight major governmental bodies, including the financial regulatory body, the People's Bank of China, and the China Securities Regulatory Commission, rolled out a set of 23 targeted actions aimed at supporting financing for small enterprises. The initiative intends to enhance financing supply, reduce costs, and improve efficiency, among other focal areas. This effort showcases a concerted regulatory and policy effort to bolster these crucial components of the economy.
Lazy bag
Eight governmental organizations have introduced initiatives to boost financial access for small businesses, featuring 23 measures focusing on efficiency and risk management.
Main Body
To address the financing challenges faced by small and micro-enterprises, the newly introduced measures focus on increasing the supply of funding and decreasing the comprehensive cost of financing. Among the detailed measures, five are geared towards enhancing the supply of financing for these businesses.
The measures include a comprehensive set of policies designed to foster financial supply, implement stock financing support, and enforce a more aligned financial support mechanism. These policies are executed under the collaboration of local government bodies, banking institutions, and regulatory agencies, ensuring that the mechanisms are tailor-fit to the actual needs and conditions in various localities.
One of the standout strategies involves encouraging eligible small enterprises to list on the New Third Board (a stock market for small and medium-sized enterprises in China), along with outlining pathways for these businesses to transition to the Beijing Stock Exchange upon growth. Social capital investments into innovative SMEs are encouraged, which aids in the holistic growth of the small enterprise ecosystem.
Additionally, there is a strong emphasis on policy support via fiscal and tax incentives, including VAT exemptions for small loans. The measures also stress the relevance of robust credit information systems to facilitate better lending decisions and obligations for financial institutions to adapt to these needs.
In tandem with the outlined policies, there is a call to optimize risk management strategies. This involves creating a supportive mechanism for bad loan recovery, simplifying loan risk categorization, and enhancing the efficiency of non-performing loan disposals. These actions promote a healthy financial system where risks are carefully managed and distributed, thereby witnessing a sustainable growth trajectory for small businesses.
The long-term vision is to improve the quality and sustainability of financial services available to micro-businesses. A critical move in this direction is the alignment of financial institutions' internal pricing strategies, offering premium rates to loans qualifying under the small businesses category, thus aligning their financial objectives with national economic goals.
Key Insights Table
| Aspect | Description |
|---|---|
| Policy Emphasis | Focus on financing supply increase and cost reduction for small businesses. |
| Support Mechanisms | Development of a structured support mechanism integrating various departments. |
| Credit Management | Efficient loan risk management and non-performing loan disposal mechanisms. |