Coronavirus: China probes ways to ramp up bank lending to cash-strapped small businesses
- Chinese authorities are asking small businesses about difficulties obtaining loans from banks, as a growing number struggle with cash flow problems
- Survey launches at a time of acute financial distress for small factories and shops, which have been hardest hit by the economic impact of the coronavirus
China’s government is asking small and medium-sized enterprises about the difficulties they are encountering when trying to take out a loan, as reports emerge of coronavirus-battered businesses struggling to get credit from local banks.
The People’s Bank of China has shovelled huge amounts of funding to smaller banks to increase lending since the outbreak began, but the efforts are facing major obstacles as regional lenders have little incentive to provide loans to small borrowers due to lack of collateral and higher default risks.
China has more than 30 million small and medium-sized businesses (SMEs), which account for 80 per cent of the country’s jobs, 60 per cent of gross domestic product and half of tax revenue, according to the Ministry of Industry and Information Technology.
I and most other business owners that I know are facing severe cash flow shortages, but have not been able to get a loan to help
The survey is open to all SMEs and asks four questions, including details of their financial situation, whether they have obtained a new loan since the outbreak began, whether they need a deferral period on interest payments, and what difficulty they have run up against while seeking a new loan or loan extension from local banks.