Bank-tax-interaction aids small businesses

Tencent-backed digital bank WeBank Co Ltd Bank said on Wednesday that it has loaned much funding support to small businesses affected by the COVID-19 pandemic by actively practicing bank-tax-interaction.

Bank-tax-interaction loan balance increased by 77 billion yuan (US$10.8 billion) in the first quarter, playing an important role in easing the financing difficulties of small businesses, according to data from the China Banking and Insurance Regulatory Commission.

Nationwide, nearly 10 percent of the outstanding loans to small firms via the bank-tax-interaction tool was extended by WeBank during the first three months.

Thanks to the practice, a company needs neither pledge nor guarantee and can make online applications and disbursements with convenience.

As long as the applications of small enterprise applies meet certain lending conditions, they can secure a loan within a minute at the quickest, WeBank said.

Bank and tax interaction is a relatively new financing channel by which banks provide loans to small and micro enterprises based on their historical tax payments.

Based on information interconnection between taxation, banking supervision departments and banks, this funding method helps enterprises convert their taxation records into financing credit so that lenders can make better judgments and appraisals while granting a loan to private firms.

During the COVID-19 pandemic, the contactless loan service provided by Internet banks reduced funding costs for small businesses and helped them get back into production.