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Industrial Bank Took the Lead to Offer “Start-up Loan” to Support Mass Entrepreneurship

The tide of mass entrepreneurship is rising, and the “last 100 meters” for small- and mini-sized start-ups are also being got through. Early in this March, Industrial Bank (IB) launched the “Start-up Loan” in six pilot cities including Shanghai, Shenzhen, Guangzhou, Nanjing, Chongqing and Xiamen, lowering the threshold. As the product takes the assurance of natural person as the guarantee mode, the borrower can receive a loan up to RMB 1 million with a valid credit term of 1 year, without providing other guaranties and pledges.

At the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) in this year, Premier Li Keqiang put forward to create one of the “two engines” that promote the development of China’s economy by encouraging mass entrepreneurship and innovation. The “Start-up Loan” was just launched at the right time.

It is learnt that, after being launched in pilot cities for half year, the “Start-up Loan” will be promoted in all branches of IB across China.

The “Start-up Loan”, put in the shoes of start-ups

Liu Ming (anonym), a Taobao shop owner of a famous brand living in Shanghai, now plans to apply for the “Start-up Loan” of IB. He said in great excitement: “At the start-up period, there is a pressing need for funds, but banks usually require valid guaranties and pledges and complete financial statements to grant loans. For small-sized merchants like us, in general it is very hard to receive loans. Now, with the ‘Start-up Loan’, I see hopes.”

What's more surprising to Liu Ming is that the “Start-up Loan” can be used for office expenses such as leasing premises and recruiting employees, and flexible methods are available for repayment. With the supporting online self-service “Circulating Loan” for small-sized enterprises offered by IB, enterprises can borrow and repay loans at any time and make use of loans in a revolving manner. Moreover, at the initial start-up period, certain concessions are available for the interest rate, which can help reduce the repayment pressure of the borrowers.

The “Start-up Loan” of IB targets at small- and mini-sized start-up customers at the initial stage and early period of development, which boast bright prospect of industrial development, of which the enterprises and projects are of growth and development potential, and the business owners conduct honest operation, and which have certain operating experience, technologies and assets.

“Urgency” is the financing features of start-up business owners like Liu Ming, and they hope to receive the funds as soon as possible eagerly to “incubate” their dreams. To meet such needs, the “Start-up Loan” pursues an efficient business procedure, creatively takes the “score card” as the standardized tool for evaluating risks, designs the items for scoring around the feasibility of start-up plan and reliability of start-up team, and decides the evaluation result based on two rounds of scoring.

“We effectively shorten the business procedure based on standardized and plant-based operating model, and grant credit approval power to branches which can handle relevant loans themselves, thus improving the handling efficiency.” According to the introduction of Du Fan, a key member of the Small-sized Enterprises Department of IB participating in the product design of “Start-up Loan”, in the first round of examination, the customer manager and risk manager give a score based on the due diligence investigation and give a grade based on the credit standing and asset situation, and operating experience of the actual controller of the enterprise, and situation of the start-up team; in the second round, a “three-member loan review panel” consisting of the person-in-charge of the small-sized enterprises department, the person-in-charge of the small-sized enterprise risks team and the person-in-charge of the specialized small-sized enterprise team of the branches will hold an interview with the actual controller to further evaluate the development potential of the enterprise, and take the results as basis for granting loans.

In the current stage, the “Start-up Loan” mainly supports three types of small- and mini-sized corporate customers, namely technology-oriented, consumption-oriented, and production-oriented. Specifically, the consumption-oriented customers include chain stores, franchised store, agencies and internet stores of famous brands and characteristic brands in relevant industries and regions that are highly recognized and accepted by consumers.

Three pertinent products of financing for small- and mini-sized enterprises

The “Start-up Loan”, as the first round of product customized by IB for small- and mini-sized enterprises at the initial stage, boasts a good extensibility. With the development of enterprises, IB can, according to the actual situation of enterprises, also provide sustained financing services including “Easy & Quick Loan”, “Consecutive Loan”, and “Trading Loan”, which are called the three pertinent products of financing for small- and mini-sized enterprises by IB, thus offering “live supply” financial services.

According to the introduction of General Manager Li Taishun of the Small-sized Enterprises Department of IB, when the assets of a start-up reach a certain scale, the bank will replace the “Start-up Loan” with “Easy & Quick Loan”, and the enterprise can receive a loan limit up to RMB 5 million. If the enterprise can produce relatively stable settlement records, the bank can also provide credit-based “Trading Loan” free of guarantee and determine the line of credit based on the valid settlement volume of the enterprise. When the loan granted to the enterprise becomes mature, the bank can offer the supporting product of “Consecutive Loan” which connects loan extension and repayment in a seamless way and requires no repayment of principal upon the maturity of the existing loan. In this way, the loan can continue to be used after the maturity of original credit extension. When the enterprise develops to the stage of preparing for IPO through financing, the bank will also bring into play its advantageous resources to offer integrated and professional capital market refinancing services by serving as a financial consultant and provide one-stop support in the following areas: capital and share increase, offering of tailored additional shares, listing at the new three boards, IPO of A-shares, etc.

Li Taishun said: “Our bank has always adhered to the business philosophy of ‘Growing Together with Sincere Service’ and we don’t pursue one-time deals. Instead, we will provide appropriate financing support at different stages that customers grow from small enterprises to big corporations and from the initial stage to the maturity, with a view to supporting and fostering customers to grow bigger and stronger.”