Cheaper loans, delayed payments: online lenders do their bit to help SMEs in Hubei rebuild after coronavirus outbreak

Alibaba-backed online lender MYbank said on Wednesday it would waive first-month interest for micro merchants applying for loans in Wuhan

Small entrepreneurs say waiving of interest, penalties and cheaper loans gives them hope for the future.

Reading Time:3 minutes

People move about in Wuhan, Hubei province, as travel restrictions are lifted in the original epicentre of the global coronavirus outbreak, on Wednesday. Photo: Reuters

Published: 6:46pm, 8 Apr 2020Updated: 7:20pm, 8 Apr 2020

Online lenders in China are extending lifelines to small businesses in Hubei to help them get back on their feet as normalcy returns to the original epicentre of the coronavirus outbreak after over two months of lockdown.

MYbank, an internet-only lender backed by e-commerce giant Alibaba Group Holding, on Wednesday waived first-month interest for micro merchants applying for loans in Wuhan, the capital of the central Chinese province and reduced the interest rate by a fifth for business owners in other parts of the province. Alibaba owns the South China Morning Post.

“We are committed to supporting SMEs [small and medium-sized enterprises] and will continue to provide leading digital technology solutions to support the recovery of small businesses and help them prepare for the future,” said Simon Hu, chief executive of Ant Financial Services, which is the largest shareholder of MYbank and an affiliate of Alibaba.

This came the same day authorities ended the lockdown of Wuhan and allowed residents to leave the city for the first time after 76 days, during which period over 50,000 people were infected and 2,571 died from the virus that causes the Covid-19 respiratory disease. China has largely brought the epidemic under control after more than two months of battling it, which at one point brought business and economic activities to a near standstill.

MYbank is an offshoot of Alibaba Group Holding. Photo: Reuters

Late last month, online lender WeBank, owned by social media and online gaming juggernaut Tencent Holdings, also announced a series of measures to relieve financial burdens on clients in Hubei. The bank waived as much as 10.6 million yuan (US$1.5 million) worth of interest and penalties owed by Wuhan-based clients who had defaulted on their loans due to the impact of the Covid-19 outbreak.

The initiatives were a timely response to China’s financial regulators’ call for banks to be more lenient on small businesses and grant them greater access to credit in this time of difficulty. The China Banking and Insurance Regulatory Commission said last week it aims to lower the funding cost of small companies in Hubei by at least 1 percentage point.