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Industrial Bank: Settling the Problem of Difficult and Costly Financing for Small- and Mini-sized Enterprises with Innovation

“Reduce the financing cost of enterprises substantially to help them overcome difficulties and survive predicaments.” In this April, Premier Li Keqiang expressed his attitude in his visit to Fujian FTZ Fuzhou Area Branch of Industrial Bank (IB). Facing the problems of difficult and costly financing for small- and mini-sized enterprises and the tide of “mass entrepreneurship and innovation”, IB has launched innovative products in succession to meet the financing needs of small- and mini-sized enterprises. By the end of this September, the balance of loans granted by IB to small- and mini-sized enterprises hit RMB 555.3 billion, up by RMB 38.9 billion over the beginning of this year. At the Chinese Banking Appraisal and Commendation for Financial Services to Small-sized Enterprises 2015 held by the China Banking Regulatory Commission (CBRC) on October 23, three teams and three employees of the Bank won the honors of “Outstanding Team of Financial Services to Small- and Mini-sized Enterprises” and “Individual Model of Financial Services to Small- and Mini-sized Enterprises” respectively.

Zhang Fan (anonym), a founder of a small-sized technology enterprise in a hi-tech park in Chengdu, was encountered with shortage of funds when purchasing raw materials for production. The purchase agreement was about to expire within less than a month, and he luckily had the pressing need met with the “Easy & Fast Loan” granted by IB.

Zhang Fan told the reporter happily, “It is a great surprise to get the loan worth RMB 4.8 million so quickly!” In the traditional credit mode, the loans for small- and mini-sized enterprises involve complicated procedure and long application period, failing to meet the “short-term, frequent and urgent” capital needs. Considering such needs, IB launched the “Easy & Fast Loan”. With the product, an approval can be given within 3 business days to an enterprise like that of Zhang Fan via standardized operation based on the evaluation of its actual operation performance and risk situation in the form of “score card” as long as all loan application materials are submitted.

Besides the “Easy & Fast Loan” for meeting the “short-term, frequent and urgent” financing needs of small- and mini-sized enterprises, IB also offers a variety of other products exclusive for such enterprises. In order to reduce their financing cost and improve their efficiency in using capital, the Bank launched “Consecutive Loan” and “Online Self-service Circulating Loan”. According to the introduction of an officer working in the Small-sized Enterprises Department of IB, the greatest feature of “Consecutive Loan” lies in the innovation in the repayment method for enterprises. Upon the maturity of a loan, without repayment of the principal, it can be extended as long as the given requirements are met and no limit is set for times of extension. The “Online Self-service Circulating Loan” supports these enterprises to do online financing, and the loan can be borrowed, used and repaid at any time via internet banking, with interest accruing according to the actual situation.

In addition, IB has made active exploration in the model of “platform finance”, piloted the application of “big data” in product design, and developed a range of “guarantee-free” products for small- and mini-sized enterprises in a bold manner, thus offering a golden financing key for enterprises harassed by the “difficult guaranty” frequently.

As learnt by the reporter, the “guarantee-free” products offered by the Bank for small- and mini-sized enterprises mainly depend on the credit enhancement means such as trading data and natural person warranty. For instance, the “Trading Loan” and online financing “e-series” are models which take the trading data as the credit enhancement means. Specifically, the “Trading Loan” depends on the trading data of enterprises such as capital flow, information flow and credit record to judge their production and operation performance and grant them credit-based guarantee-free loans. The “e-series” includes e-second loan, e-purchase loan, e-order loan, e-bill loan, etc., offering loans to enterprises based on their orders, accounts receivable, and electronic warehouse receipts generated in the trading systems at e-commerce platforms. Since its launch in this April, the “e-series” has benefited 140 small- and mini-sized enterprises and granted credit of RMB 286 million, with a loan balance up to RMB 240 million. In the meantime, the Bank also issued the “Start-up Loan” for small- and mini-sized enterprises in the initial period in this March, which, adopting the assurance of natural person, offers financing only based on the several liability guarantee provided by the actual controller of an enterprise and his or her spouse. By the end of September, the Bank has approved a total of RMB 38.80 million as the “Start-up Loan”, of which RMB 19.10 million has been granted.

With the coming development opportunities of multi-level capital market in China, IB has brought into play its group-based and integrated business operation advantages and intensified innovation in comprehensive financial services for small- and mini-sized enterprises by making use of its multiple financial licenses and market resources. In this August, the Bank released the special action plan of “V Start-up Portfolio”, offering comprehensive service solution integrating debt financing, equity financing, settlement and wealth management, and financial consultant for small- and mini-sized enterprises with the innovated financing model combining both equity and debt. By the end of September, the plan has attracted 1,408 small- and mini-sized enterprises.