Shanghai beefs up fund to help small firms
By Feng Jianmin |
June 11, 2012, Monday
|
Print Edition
Print Edition
SHANGHAI will allocate another 2 billion yuan (US$316 million) as financial support for small and micro-sized businesses, adding to an earlier 3 billion yuan extended last September.
"The small businesses are important in maintaining a relatively quick economic growth and powering innovation in the city," said Jiang Zhuoqing, deputy secretary general of the Shanghai government and head of its treasury department.
"But their difficulty to get financing has become a bottleneck in accelerating the development of these firms."
After the replenishment, 2 billion yuan will be usevd to buy stakes in commercial guarantee companies, up 1 billion yuan from last year, according to an official document. The money will boost the ability of guarantee companies to help small firms get loans from banks as the firms lack suitable collateral to secure credit.
Another 2 billion yuan will cover possible bad loans that commercial banks may suffer from lending to high-tech start-up firms, up from 1 billion last year. Banks are eligible to claim a subsidy if the bad loan ratio of lending to small and micro business exceeds 3 percent.
The remaining 1 billion yuan will be invested in or lend to high-tech small firms through the city's investment arm.
The city's financial support plan has sparked a flow of private capital to small firms as investment sentiment rose, Jiang added.
So far, three state-owned investment companies in Shanghai have injected a combined 1.04 billion yuan into seven private and government-backed guarantee companies in the city, Jiang said.
Shanghai Huijin Financing Guanranty Co has helped small firms to access more than 1 billion yuan worth of loans from banks this year, according to a company statement.
A government statement on Thursday said that Shanghai has around 346,200 small and micro-sized businesses by the end of 2011, accounting for 96.8 percent of companies of all sizes. They employ 54.6 percent of the city's total workforce.
Shanghai's decision to boost financing was in line with a State Council, or Cabinet, announcement in May.
"The small businesses are important in maintaining a relatively quick economic growth and powering innovation in the city," said Jiang Zhuoqing, deputy secretary general of the Shanghai government and head of its treasury department.
"But their difficulty to get financing has become a bottleneck in accelerating the development of these firms."
After the replenishment, 2 billion yuan will be usevd to buy stakes in commercial guarantee companies, up 1 billion yuan from last year, according to an official document. The money will boost the ability of guarantee companies to help small firms get loans from banks as the firms lack suitable collateral to secure credit.
Another 2 billion yuan will cover possible bad loans that commercial banks may suffer from lending to high-tech start-up firms, up from 1 billion last year. Banks are eligible to claim a subsidy if the bad loan ratio of lending to small and micro business exceeds 3 percent.
The remaining 1 billion yuan will be invested in or lend to high-tech small firms through the city's investment arm.
The city's financial support plan has sparked a flow of private capital to small firms as investment sentiment rose, Jiang added.
So far, three state-owned investment companies in Shanghai have injected a combined 1.04 billion yuan into seven private and government-backed guarantee companies in the city, Jiang said.
Shanghai Huijin Financing Guanranty Co has helped small firms to access more than 1 billion yuan worth of loans from banks this year, according to a company statement.
A government statement on Thursday said that Shanghai has around 346,200 small and micro-sized businesses by the end of 2011, accounting for 96.8 percent of companies of all sizes. They employ 54.6 percent of the city's total workforce.
Shanghai's decision to boost financing was in line with a State Council, or Cabinet, announcement in May.
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