Date: December 12, 2012 Source: Jiefang Daily
A few days ago, Shanghai Fenghe Restaurant Management Co., Ltd. (Fenghe), the operator of Akasaka Japanese Cuisine, applied to Industrial Bank (IB) Shanghai Branch for a loan of RMB 2.6 million for the purpose of decorating new restaurants. To the surprise of Fenghe, it received the loan within a short time. Moreover, IB also designed a five-year loan for the decoration of commercial premises based on the monthly repayment of principal and interest according to the cash flow characteristics of the catering sector. With the loan, Akasaka Japanese Cuisine opened five new restaurants in Shanghai, creating more than 60 jobs.
That IB Shanghai Branch could provide the most suitable loan variety to those small- and mini-sized enterprises in the greatest need of support cannot do without the detailed and thorough pre-loan investigation. It is reported that enterprises engaging in catering are those receiving the least credit support. On the one hand, there are a great variety of segments in the catering industry, which are characterized by a short lifecycle. It is hard for banks to control and judge the situation. On the other hand, a considerable part of incomes in the catering industry are not invoiced, so the operators would generally “hide” some incomes in consideration of avoiding tax. This causes great difficulty for banks to analyze their financial situation. For this reason, the investigators of IB visited the ten restaurants of Akasaka Japanese Cuisine in operation and five planned ones to investigate the surrounding commercial environment, number of pedestrians, and customer flows at the lunch time and supper time, and experience the quality of services and products in several restaurants. Finally, based on the personal experience and rational data analysis, the bank decided to support the development of the enterprise.
As from 2012, IB Shanghai Branch has always taken it as an essential part of strategic adjustment to develop outstanding small-sized customers. By the end of this May, the total number of medium-sized, small-sized and mini-sized loan customers hit 602, with a balance of loans reaching RMB 14.6 billion, 13.6 billion and 4.8 billion respectively, and RMB 33 billion altogether. In order to support the development of small- and mini-sized enterprises and promote the social employment, the bank has also adjusted its development concept of retail credit business, developing the business of personal business loan in an active manner. Till the end of May 2012, IB extended a total of 1,485 personal business loans worth RMB 5.56 billion. At present, 839 of them have balance, which totals RMB 3.109 billion.
The effectively increased scale of loans to small- and mini-sized enterprises can also be attributed to the innovation of loan model. Located in Zhangjiang Hi-tech Park, Mingsi Company developed an electronic control system in the field of energy conservation and emission reduction for automobiles, and established production bases in Jiangsu and Zhejiang. It is expected to put the system into large-scale production in the coming five years. Nonetheless, as a technological R&D enterprise, the company is in the early phase of investment from development to production in small batches, and the limited sales income cannot change the situation that the enterprise encounters general losses. As a result, its capital chain is very tense. We can say that Mingsi Company is in the key stage of growth and it will win massive opportunities if it can receive financial support in a timely manner.
However, it does not have outstanding performance and financial statement and lacks guarantee. According to the conventional credit norm and procedure, it is almost impossible for a bank to extend pure credit loan to a small-sized technological enterprise like Mingsi Company. But, after a detailed investigation over the financial situation, business guideline and development prospect of Mingsi Company, IB learnt that many venture capital institutions had taken a fancy to the company and signed relevant investment agreements with it. Considering the circumstance, IB Shanghai Branch made active innovation and discussed about the financial service scheme with the enterprise, the park and venture capital institutions. With the solution of “followed investment and loan” product, Mingsi Company received a supporting pure credit loan of RMB 3 million. The so-called “followed investment and loan” means that, as a corporate finance consultant, a bank signs a three-party agreement with a venture capital institution and a borrowing enterprise, and on the basis of the venture capital institution makes equity investment, the bank provides financing support to SMEs in the form of creditor's right, thus forming a linked financing model between equity investment and bank credit. At present, this innovative financial solution wins the enthusiastic response of quite a number of outstanding enterprises in the hi-tech park.