Funding costs for small firms to be eased

Xinhua
China will work to ease the financing strain and high funding costs for small companies amid continued efforts to cut costs in the real economy.
Xinhua

China will work to ease the financing strain and high funding costs for small companies amid continued efforts to cut costs in the real economy, the State Council decided at an executive meeting yesterday.

“The country will maintain the prudent and neutral monetary policy, keep liquidity at a reasonable and ample level, maintain financial stability, enhance overall coordination of policies to consolidate the momentum of stable and sound economic growth, boost market confidence, achieve relatively full employment and ensure the economy runs within a reasonable range,” said a statement issued after the meeting.

The meeting approved a series of fiscal, tax and financial incentives. The volume of re-lending and rediscount for small businesses and for rural areas, agriculture and farmers will be raised. The re-lending interest rate for small businesses will be lowered. Evaluation for financial institutions will be improved to make sure that businesses with a credit quota of 10 million yuan (US$1.5 million) and below shall enjoy faster loan growth than other types of credit recipients.

Between September 1 this year and the end of 2020, the credit quota for small businesses with loans that are eligible for value-added tax exemptions on interest revenues will be raised from 1 million yuan to 5 million. Meanwhile, the state financing guaranty fund will cover no less than 80 percent of the financing guarantee for small businesses. Financial institutions will also be banned from charging commitment fees and fund management fees on small companies to reduce additional financing expenses.

The country will encourage banks to expand businesses supporting small firms, increase credit supply through targeted reserve requirement ratio cuts and other monetary policy tools, and accelerate debt-to-equity swap projects.

The meeting also decided to speed up the approval process for medicines from overseas, enforce measures to lower the prices of cancer drugs and address the shortage of certain drugs.

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