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Shanghai to help SMEs in more ways

SHANGHAI will help small- and medium-sized enterprises to diversify channels of raising funds by expanding the coverage of small-loan companies as the SMEs still face difficulties in getting credit from banks.

This expanded coverage is one of the measures that the Shanghai Financial Services Office is studying to support the SMEs. The city government will also give subsidies to SMEs which apply to go public. It is studying the feasibility of involving insurers in the credit assessment system to help banks reduce risks when lending to SMEs.

"The prosperity of SMEs is vital to Shanghai's economic growth," Fan Yongjin, deputy director of the office, said yesterday at a conference to address the difficulties that SMEs face getting funds.

"Also, to provide good financial services to SMEs is an integrated part for Shanghai to achieve its goal of becoming a global financial hub."

To diversify the channels for them to get funds, Shanghai launched the first small-sum loan company in November. The government so far has approved the setting up of 30 such firms, which cover most of the districts in the city. By the end of last month, they have lent more than 1.5 billion yuan (US$220 million) to local SMEs.

These small-sum loan firms have flexibility on interest rates and lend no more than 500,000 yuan in a single loan to SMEs defined as having less than 300 million yuan in annual sales.

"We will further expand the network of small-sum loan companies to support the development of SMEs," Fan said, adding that they were also encouraged to seek direct capital in listing in the upcoming growth board.

The government is considering getting insurers as guarantors to tap their risk management experience.


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