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August 11, 2009

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Incentives benefit 39 credit companies

SHANGHAI has approved the set-up of 39 small-credit companies by the end of July as authorities granted subsidies and rent discounts to encourage their establishment in an effort to boost small business.

Among the 39 small-credit firms, 26 have started operations in the city with a combined outstanding credit of 1.8 billion yuan (US$264 million) by the end of July, said the Shanghai Financial Services Office yesterday.

China allowed the set-up of small-credit companies last year to help small business, which already faced barriers to credit, to weather the global financial crisis and the economic slowdown.

The small-credit companies have issued more than 3,000 loans since the first small-credit firm was set up in the city's Baoshan District in November.

They were first set up in rural districts and were expanded citywide this year.

The districts have preferential policies to encourage investors to establish small-credit companies to boost the local economy, the office said.

For example, Baoshan District has set up a foundation in 2008 with an annual fund of 50 million yuan for three years while Xuhui District will offer a maximum subsidy of 2 million yuan annually to a single company for its first three years of operations.

Huangpu District offers subsidies covering up to 50 percent of the office rent to help small-credit firms start up business.

The small-credit firms can make short-term loans of a maximum one-year duration.


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