In Anhui Province, a mechanical manufacturing company recently found relief from financial pressures through China’s new loan renewal policies for small and medium-sized enterprises (SMEs). As their current loan approached maturity, the company applied for a deferred principal repayment, easing short-term liquidity concerns and allowing them to focus on operations rather than immediate repayment.
“The loan renewal terms, including the interest rate and repayment structure, are relatively flexible,” said Zhang Jinzhi, the company’s representative. “When our loan was about to expire, we applied for an extension with deferred principal repayment, which alleviated our liquidity pressures.”
These measures are part of a broader national strategy aimed at supporting SMEs in China. The government has introduced various initiatives this year to ease the financial burden on businesses, with principal-deferral loan renewals being one of the most widely supported policies. Initially introduced for micro-enterprises, this policy has been expanded to include small and medium-sized businesses, helping them maintain operations during challenging periods.
Beyond loan renewals, the government has launched a 100 billion yuan (approximately $13.8 million) re-lending scheme targeted at start-ups and tech-focused SMEs. Financial institutions are encouraged to reduce service fees for smaller businesses and offer more flexible repayment terms. By September 2024, the total loan balance for small and micro-businesses had increased by 2.2 trillion yuan across major commercial banks.
Hu Dongchen, co-founder and CFO of Syi Tsing Energy Tech, a start-up specializing in software and hardware solutions for energy storage networks, sees significant benefits in these policies.
“Though it takes time for national policies to be implemented by banks, the option for loan extension with deferred principal repayment directly supports our operations,” Hu told CGTN. His company, which is exploring green energy initiatives, values stability and consistency in policies.
These initiatives demonstrate China’s commitment to fueling innovation and supporting the growth of SMEs. By enhancing access to finance and offering flexible lending options, the government aims to bolster economic resilience and encourage entrepreneurial endeavors across the nation.
Reference(s):
China's initiatives for SMEs boost access to finance, fuel innovation
cgtn.com
