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Beijing E-Town alleviates financing difficulties for small enterprises

Updated: 2023-12-25

Beijing E-Town recently took the lead in formulating management measure for the risk compensation fund for small and micro enterprise loans, which will be issued in the coming days. 

By optimizing financial support and development policy tools, the measure effectively alleviates the financing difficulties faced by small and micro enterprises in the area.

According to the head of the Financial Audit Bureau of Beijing E-Town, this management measure targets non-performing loan projects involving small and micro enterprises within cooperating bank institutions. 

Through the "Risk Compensation Fund" financed by the development zone's financial audit bureau, a risk compensation of 30 percent to 40 percent is provided for the outstanding principal balance of non-performing loan projects. 

The measure consists of six chapters and 28 articles, covering risk compensation, risk compensation standards, business circuit breaker mechanism, fund application process, fund management requirements, and policy benefit tracking. 

The policy will take effect from 2024, with a validity period of three years. The initial scale of the risk compensation fund is set at 30 million yuan ($4.2 million), with a total scale reaching 100 million yuan.

The measure has a broader scope of policy benefits, a stronger policy orientation, more appropriate filing and compensation reporting, moderate compensation intensity, and more effective overall liability control.

The broader scope of policy benefits is reflected in the diversity of compensated loan types and the reasonable coverage period. In addition to supporting banks in providing credit loans to small and micro enterprises, the measure also covers policy-supported intellectual property pledge loans and accounts receivable pledge loans.

The stronger policy orientation lies in the measures directly addressing the difficulties faced by small and micro enterprises in financing without qualified collateral, pledge items, or the ability to introduce third-party guarantees. It includes credit loans, intellectual property pledge loans, and accounts receivable pledge loans in the supported range.

Regarding the formulation of filing and compensation reporting content, the policy proposes quarterly project filing and reporting. The compensation recognition standard is set as "substandard," and banks can apply for compensation after the loan is classified as non-performing, within 12 months from the contract expiration date.

In terms of overall liability control, the measure requires the cooperating bank to specify the loan amount for a single enterprise and the outstanding foreign currency loan balance shown in the "credit report" within five working days before or after the loan is disbursed.