Unblocking Microfinance Bottlenecks
Recently, relevant individuals have stated that to effectively meet the financing needs of enterprises and promote the relief and development of small and micro enterprises, it is necessary to treat private enterprises and small and micro enterprises equally and increase support for them. What issues still exist in the financing of small and micro enterprises? Next, how to unblock the financing bottlenecks and guide financial resources to continuously nourish small and micro enterprises?
Promoting Direct Credit Funds
This year, the scale of credit supply has been steadily increasing. Data shows that as of the end of August this year, the balance of RMB loans was 252.02 trillion yuan, a year-on-year increase of 8.5%. In terms of structure, the support for related key areas continues to increase. Inclusive small and micro enterprise loans increased by 16.1% year-on-year, and private enterprise loans increased by 9% year-on-year. In terms of price, interest rates have been stable with a slight decrease. From January to August this year, the interest rate of newly issued inclusive small and micro enterprise loans decreased by 0.4 percentage points year-on-year.
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The increased loan distribution also means that the financial demand of small and micro enterprises is on the rise. The Central Financial Work Conference proposed to use more financial resources to promote scientific and technological innovation, advanced manufacturing, green development, and small and medium-sized enterprises. However, there are still many small and medium-sized enterprises in China that are "credit blank households," lacking high-quality credit information with continuity and stability, which seriously restricts financial institutions from providing high-quality financial services. In recent years, financial institutions have focused on the financing bottlenecks of small and micro enterprises, strengthened financing support, and taken multiple measures to expand financing channels.
In Fangchenggang City, Guangxi, local banking institutions have joined forces with tax departments to rely on digital methods to explore the financing credit of small and micro enterprises and unblock credit distribution bottlenecks. Dongxing City, which is engaged in food processing and production, needs to invest a large amount of funds to purchase raw materials such as durian and taro. Only after the products are sold can funds be received. The time difference between buying and selling puts pressure on the company's cash flow. "Thanks to the company's credit data and operating conditions, Guangxi Dongxing Rural Commercial Bank granted us a loan of 1 million yuan in a timely manner, bringing new vitality to the company's production expansion," said Wu Qingxun, deputy general manager of the company.
Experts believe that from the perspective of bank credit, there are still many small and micro enterprises that have not been included in the basic financial credit information database. The proportion of traditional mortgage loans in small and micro loans is relatively high, and there is an urgent need to obtain more useful and reliable non-credit data to optimize financing information services. Banks should continue to strengthen the sharing of external information and credit, actively connect with external data sources such as market supervision, credit investigation, electricity, and telecommunications, focus on breaking data islands, and promote the establishment of a cross-industry, cross-domain, and cross-regional data service platform to accurately portray enterprises and reduce credit distribution risks.
To further unblock the financing bottlenecks of small and micro enterprises, the National Financial Regulatory Administration and the National Development and Reform Commission have recently deployed the work of supporting the financing coordination mechanism for small and micro enterprises. Deputy Director of the National Financial Regulatory Administration, Cong Lin, stated that from the three dimensions of who to do it, how to do it, and what goals to achieve, the financing mechanism will be further straightened out, a precise bridge between banks and enterprises will be built, and credit funds will be quickly directed to small and micro enterprises.
Specifically, the first is "who to do it." At the district and county level, a working group should be established to organize enterprise visits, demand investigation, and financing recommendations. At the bank level, a working group will be set up to mobilize internal resources and play the enthusiasm of grassroots institutions to lend and be willing to lend, actively and timely connecting with the financing needs of small and micro enterprises.
The second is "how to do it." For example, the district and county working group should "hold both hands," one hand holding enterprises and the other hand holding banks. By going deep into parks, communities, and rural areas, comprehensively investigating financing needs, forming "two lists," and recommending qualified small and micro enterprises to banking institutions, banking institutions can timely and accurately connect to achieve direct credit funds to the grassroots.
The third is "what goals to achieve." Cong Lin stated that three goals are hoped to be achieved: the first is to reach the grassroots. Low-cost credit funds should directly reach the grassroots, unblocking the "last mile" of benefiting enterprises and the public. The second is fast and convenient. For qualified enterprises, banks should open green channels and speed up processing. The last is a suitable interest rate. By saving the cost of information collection and reducing intermediate links, lending costs and additional fees are reduced, overall lowering the comprehensive financing costs of small and micro enterprises.Everbright Bank's Financial Market Department macro researcher, Zhou Maohua, stated that this year, China's economy has generally maintained a stable recovery trend. However, from economic data, it is observed that there is a lack of effective demand in China, micro-entities are not sufficiently active, industry recovery is unbalanced, and corporate confidence needs to be boosted. The coordination mechanism for supporting small and micro enterprise financing fully considers the actual difficulties faced by the current economy and its long-term development. By establishing a long-term mechanism to solve the financing difficulties of small and micro enterprises, their healthy development can be effectively promoted.
Optimizing Technology Financial Services
Financial services for technology-based small and micro enterprises are an essential part of promoting the development of new quality productive forces. The central financial work conference proposed to do well in "five major articles" including technology finance, which has clarified the direction for commercial banks to serve technology-based small and micro enterprises. Technology finance involves various aspects such as financial models and financial products. Currently, commercial banks are accelerating new explorations in financial products around the financing needs of technology-based small and medium-sized enterprises.
In recent years, Taizhou Bank has launched inclusive supply chain financial products from the characteristics and financing needs of technology-based small and micro enterprises, aiming to serve every link of the small and micro enterprise industry chain through financial power. Taking the supply chain of technology-based small and micro enterprises in the field of renewable resource comprehensive utilization as an example, the bank has achieved efficient allocation of credit resources by effectively integrating the upstream and downstream supply chain of enterprises. As of the end of June, the bank's loan balance for technology-based small and medium-sized enterprises was 10.382 billion yuan, supporting 3,141 national high-tech enterprises and technology-based small and micro enterprises to achieve equipment updates and scale expansion.
Overall, the banking industry has achieved preliminary results in supporting the development of technology-based enterprises. The statistical report on the direction of financial institution loans in the second quarter of 2024 shows that by the end of the second quarter of 2024, 261,700 technology-based small and medium-sized enterprises received loan support, with a loan rate of 46.8%, 0.1 percentage points higher than the same period last year. 257,600 high-tech enterprises received loan support, with a loan rate of 55.6%, 1.1 percentage points higher than the same period last year.
However, technology-based small and micro enterprises generally have characteristics such as light assets, long investment cycles, and high uncertainty of success. Traditional commercial bank credit issuance often "emphasizes revenue, guarantees, and mortgages." From the financing path of technology-based small and micro enterprises, there is still a mismatch between financial supply and corporate demand.
To this end, commercial banks should also strengthen the innovation of financial products and services to better meet the financing needs of technology-based small and micro enterprises. Li Peijia, the head of the China Financial Team at the Bank of China Research Institute, said that banks should not only focus on traditional financial indicators but also consider factors such as technological content, intellectual property rights, and supply chains, innovating products such as intellectual property rights pledge, chattel mortgage, and accounts receivable pledge. In terms of exclusive products for technology finance, based on the financing characteristics of scientific and innovative enterprises, explore financing channels from multiple aspects. For example, in the exclusive evaluation system for technology-based enterprises, banks explore the construction of an exclusive evaluation system for technology-based enterprises, aiming to solve the financing pain points of technology-based enterprises lacking collateral and guarantees.
In addition, it is necessary to focus on the different life cycles of technology-based enterprises and do a good job in product iteration to improve product adaptability. Li Peijia said that according to the characteristics of different enterprise funding needs, precise portraits should be created to develop customized financial products. For example, vigorously expand the business of technology bonds and asset securitization, and the raised funds are specifically used for projects that meet national strategy and support key core areas of scientific and technological innovation.
Do a good job in loan renewal services
Small and micro enterprises are an important force in stabilizing the economy and expanding employment, playing a pivotal role in absorbing employment and increasing income. For a long time, China has attached great importance to financial services for small and micro enterprises.Lou Pengfei, a researcher at China Postal Savings Bank, stated that in recent years, China has introduced measures to support the financing of small and micro enterprises (SMEs) from aspects such as monetary policy and financial regulatory policies. While maintaining a reasonable and sufficient total liquidity, monetary policy has guided increased financing support for SMEs through structural reserve reductions and the introduction of structural monetary policy tools. In terms of financial regulation, by clarifying regulatory requirements, financial institutions have been encouraged to increase first-time loans, develop credit loans, and carry out loan renewals without principal repayment, thereby improving the accessibility of financing for SMEs.
SMEs that have experienced the impact of the pandemic are gradually recovering. From the perspective of SME financing paths, whether it is investment in product development or facing market competition challenges, a financial safety cushion is essential to mitigate risks. However, against the backdrop of SMEs being constrained by limited financing channels and a lack of effective collateral, a one-time credit service provided by banks is insufficient to address long-term financing needs. Therefore, the role of loan renewal without principal repayment is particularly important.
A responsible person from the relevant department of the State Financial Regulatory Administration (SFRA) said that to improve the accessibility and convenience of loan renewal services for small and medium-sized enterprises, and to alleviate their financing pressures, the SFRA has optimized and adjusted relevant loan renewal policies. For example, all SMEs that still have financing needs after the loan matures and temporarily face financial difficulties can apply for loan renewal support from banking financial institutions. Banking financial institutions should independently approve and handle loan renewals according to market-oriented and rule-of-law principles, allowing SMEs to continue using loan funds through new loans to settle the original loans.
From the perspective of preventing financial risks, banks should also manage the risks associated with loan renewals well. Du Yang, a researcher at the Bank of China Research Institute, said that commercial banks should actively strengthen post-loan risk management in line with the characteristics of SMEs and medium-sized enterprises, to prevent SMEs from concealing their true operating and financial conditions through loan renewals or from using short-term loans for long-term purposes, or changing the loan's intended use. Banks should establish a list of customers for loan renewals without principal repayment, increase the intensity and frequency of post-loan monitoring, and verify whether loan payments comply with the agreed purposes through account analysis, voucher inspection, or on-site investigations. In addition, banks should regularly analyze loan risks, loan quality, and the compensation capacity of guarantors, and conduct timely follow-up analysis to perform risk assessment and early warning.