Every June, the capital turnover problem has been harassing Zhu Xing, the chairman of an industrial and trading company in Xiamen.
Mr. Zhu’s company is a small- and mini-sized enterprise manufacturing bathroom accessory products. It has been providing bathroom accessory products for a local leading enterprise in Xiamen and maintaining a sound business status. To expand capacity, the company borrowed a working capital loan of 3 million yuan that dues in June from a bank. To renew a loan requires repayment first, but the company has already put all its capital into production. Every time June comes, Zhu Xing has to borrow money here and there or even from loan shark. It costs not only time and energy but also high financing costs, and regular operation of the company is also affected.
All this has changed fundamentally in this June. Although the working capital loan is close to due, instead of getting busy with financing, Zhu Xing is pretty relaxed . The fact is that his problem had been completely solved by IB’s “Consecutive Loan” product.
Zhu Xing told the reporter that, based on the actual situation of his company, IB recommended him with “Consecutive Loan”, and “customized” a financing solution, i.e. combining “short term working capital loan + Consecutive Loan”. As a result, Mr. Zhu no longer needs to borrow money to repay the loan upon expiration and the term of loan will be extended for one more year, thus supporting the production and operation of his business.
"With this product, I don’t have to borrow money here and there upon expiration, and bridging cost is also saved. I can pay more attention to production and operation," said Zhu Xing.
A relevant person-in-charge of Small-sized Enterprises Department of IB made a calculation: under traditional model of "repayment before loan renewal", it takes about 5 days from repayment to receipt of renewed loan. For a 3 million loan, the bridging cost is generally 18,000-30,000 yuan by private lending, “With the help of ‘Consecutive Loan’, such money could be saved.”
It is introduced that, to solve the temporary shortage of funds caused by the mismatch between length of maturity and operating cycle and alleviate the financial cost for small- and mini-sized businesses, IB launched “Consecutive Loan”, an innovative credit product exclusively for small- and micro mini-sized businesses, in last October. For small- and micro mini-sized businesses with sound operation and using IB as their major clearing bank, they don't have to repay the principal upon maturity, and borrowers can continue using the loan upon expiration of original credit extension, thus supporting the capital turnover of these businesses with a seamless joint between loan extending and repayment and extended repayment deadline.
As noted by the reporter, the credit line of “Consecutive Loan” may reach as high as 10 million yuan, and renewal upon maturity is possible as long as certain criteria is met. In the meantime, as a supporting product, “Consecutive Loan” can be made together with several loan products targeting at solving short term capital turnover of businesses.
As indicated by the data from IB, by the end of May 2014, the product has been launched at 12 branches, including Shanghai, Beijing, Hangzhou, Fuzhou, Xi’an, Wuhan, Xiamen, Chongqing, Hefei, Huhhot, Quanzhou, Sanming and Longyan. An amount of 271.64 million yuan has been approved, effectively solving the difficulties in financing bridging cost of many small- and micro mini-sized businesses.