“Happiness gives me a great surprise!” exclaimed Zheng Shusen (anonym), person-in-charge of a gear company in Jian'ou, Nanping, Fujian. In this May, the two loans borrowed from Industrial Bank (IB) by the company, totaling RMB 6.5 million, became mature. Because IB released the product of “Consecutive Loan”, the company submitted an application in advance, renewing the loans easily, instead of taking out the working funds for normal operation to repay loans every time upon their maturity or even having to raise working funds at a high rate as the company used to do before. Zheng Shusen gave a long sigh of relief, “I don’t have to worry about the circulation of capital upon the maturity of loans any more. Now, I can concentrate my attention on production.”
What is “Consecutive Loan” then? General Manager Li Taishun of the Small-sized Enterprises Department of IB explained, “For a long period, difficulty and high cost of onlending have restricted the development of many small-sized enterprises. For this reason, we, making innovation in the repayment method for enterprises, launch the ‘Consecutive Loan’, an exclusive financing product for small- and mini-sized enterprises, which is designed specifically for solving the problem of temporary shortage of funds due to the mismatch between loan terms and actual production and operation cycles in small- and mini-sized enterprises.”
It is said that, for qualified small- and mini-sized enterprises, the “Consecutive Loan” allows no repayment of principal upon the maturity of their existing loans, and by connecting loan extension and repayment in a seamless way, enables borrowers to continue using the borrowed funds after the maturity of original credit extension, thus alleviating the financial pressure of small- and mini-sized enterprises substantially and guaranteeing the capital circulation for day-to-day production and operation. “The ‘Consecutive Loan’ is a supporting product, boasting a broad coverage. Various short-term loans that we grant to small- and mini-sized enterprises for capital circulation for day-to-day production and operation can use it for supporting”, added General Manager Li.
A hotel operator in Huhhot, Inner Mongolia is also a direct beneficiary of “Consecutive Loan”. The company applied a working capital loan of RMB 4.5 million from IB in 2014, with a term of 1 year, for circulation of funds in day-to-day operation. As the company mainly engages in the property operation and management like hotel, fixed assets account for a big proportion and the funds settled on the account are relatively small. If it is required to make repayment first upon the maturity of bank loans, the company has to resort to the working funds for day-to-day operation. If the company resorts to funds from external short-term lending at a high rate, it will inevitably increase the financial burden of the company.
Wu Mingsheng (anonym), CFO of the company, told the reporter that, thanks to the financial service solution of “Working Capital Loan + Consecutive Loan” customized by IB for the company, the onlending cost of the company was reduced significantly as “only interest was required to be repaid but not the principal” when the original loan became mature in April 2015 and the loan was renewed easily. As a result, it caused no impact on the daily operation of the company.
According to the data provided by IB, by May 2015 the “Consecutive Loan” of IB has been extended in 17 cities in succession, including Nanjing, Shanghai, Hangzhou, Chongqing, Zhengzhou, Wuhan, Taiyuan, Xiamen, Changchun, Quanzhou, Hefei, Huhhot, Harbin, Zhangzhou, Nanping, Ningde and Sanming, and within only 19 months, reduced the repayment of loans by a total of RMB 800 million for nearly 200 small- and mini-sized enterprises.
In fact, the “Consecutive Loan” is only a weapon out of the arsenal that IB uses to assist small- and mini-sized enterprises to solve the problem of “difficult and costly financing”.
It is reported that, considering the financing characteristics of small- and mini-sized enterprises of “being short-term, small-value, frequent and urgent”, IB has launched a number of innovative products one after another: the portfolio of three pertinent financing products for small- and mini-sized enterprises covering convenient and efficient “Easy & Quick Loan”, the “Consecutive Loan” for alleviating the repayment pressure, and the credit-based “Trading Loan” free of guarantee; the online self-service “Circulating Loan” for small- and mini-sized enterprises enabling “online financing, self-service and borrowing and repayment of loans at any time”; the “Start-up Loan” targeting at enterprises in the initial start-up stage and offering the credit loan up to RMB 1 million; the “Industrial e-financing” online financing system relying on the application of internet technology and platform finance, which offers “e-series” products for small- and mini-sized enterprises of supply chains of core enterprises and registered trading customers in e-commerce platforms; the “IB Open Sesame – SME IPO Program” that combines “debt financing” and “equity financing” to help small- and mini-sized enterprises to match the capital market, thus fully meeting various financing needs of small- and mini-sized enterprises at different growth stages. By the end of March 2015, the balance of self-defined loans of IB for small- and mini-sized enterprises hit RMB 108.8 billion, up by 3.95% over the beginning of this year.
With the broadening business extension, the bank also made bold reform in the specialized business operation and management system for small- and mini-sized enterprises in recent years, witnessing fast growth in the specialized financial service team for small- and mini-sized enterprises. Further improving a “three-grade” specialized operation system for financial services to small- and mini-sized enterprises, consisting of the Small-sized Enterprise Department of IB Head Office, small-sized enterprise departments of branches, and small-sized enterprise centers at cities, the bank now boasts over 400 special business teams for small-sized enterprises and almost 1,700 specialized employees to provide integrated financial services for small- and mini-sized corporate customers.