Shanghai to issue collateral-free, low-interest loans to help small businesses
(Yicai Global) June 24 — Several government departments in Shanghai are supporting local banks to provide unsecured, low-interest loans to micro, small and medium-sized enterprises in the city that have been hit hard by the recent Covid-19 outbreaks to help them get through the tough times.
The Shanghai Municipal Policy Financing Guarantee Fund Management Center for Micro, Small and Medium Enterprises, district-level government finance offices and commercial banks join forces to provide eligible enterprises with low funding and high approval rates, Yicai Global has learned.
The bailout targets companies that are experiencing a liquidity crunch but still have good market prospects, a respectable credit history and a stable number of employees. A micro or small business can apply for a maximum credit of 10 million CNY (1.5 million USD), while loans for medium-sized businesses can be up to 50 million CNY, depending on the local government. Interest rates should not be higher than the usual average interest rate for these companies.
The management center will guarantee the loans while the financial offices in the district where the company is located will subsidize the interest payments and provide a certain amount of risk compensation to the banks. District governments will also provide additional fee reductions to businesses, taking into account the fallout from new coronavirus outbreaks this year.
Publishers: Tang Shihua, Kim Taylor