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November 8, 2016

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SMEs facing ‘tight budget’ woes

SMALL companies in Shanghai are facing “a tight budget” as most of them cited reasons such as insufficient assets to qualify for loans and relatively high financing costs, a report said yesterday.

Nearly 48 percent of the small and medium-sized enterprises said they face a tight financial strain, and over 71 percent of them declared difficulties in fundraising, said a report released by Shanghai Statistics Bureau.

Shanghai is aiming to build itself into a globally influential innovation hub by 2020. The People’s Bank of China cut interest rates five times in 2015 to improve fundraising conditions for startups.

However, small businesses said their access to funds didn’t improve, the bureau said in a report after surveying 537 SMEs based in Shanghai. Sixty claimed to be at the startup stage, 299 at developing stage, and the rest at developed stage.

“Technology-driven SMEs and modern services have good ideas and market potential, so they need a large sum of capital to support their expansion,” the report said. “But such SMEs fail to qualify for loans provided by banks, which leads to obstacles for their research and development process.”

Some startups, however, turned to funds from venture capital firms and private lending that cost more, further aggravating the burden of entrepreneurs, the report said.

“Setting up third-party service platform, enhancing transparency of financing information and strengthening cooperation between government and banks could lead to efficient fundraising for SMEs,” the report suggested.


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