Another Boost for SMEs: a Funding Floor Set for the Packaging and Printing Industry

[ppzhan summary] On the Chinese market, small and medium-sized enterprises are scattered everywhere, and the printing and packaging industry is no exception. As the whole industry moves toward increasingly thin profits, capital turnover has become a headache for enterprises. Financing is a good approach, but given the sluggish state of the industry, banks are unwilling to provide financing. Recently there has been good news: the State Council issued the "Implementation Opinions of the General Office of the State Council on Financial Support for the Development of Small and Micro Enterprises" (hereinafter referred to as the "Opinions"), which sets a lower limit for loans to micro and small enterprises.

Following the State Council's temporary exemption of VAT and business tax for 6 million small and micro enterprises and the National Development and Reform Commission's release of eleven guiding opinions on financing for small and micro enterprises, small and micro enterprises have received another policy boost. On the 12th, the State Council issued the "Implementation Opinions of the General Office of the State Council on Financial Support for the Development of Small and Micro Enterprises" (hereinafter referred to as the "Opinions"), proposing that, on the premise that risks are generally controllable, the growth rate of loans to small and micro enterprises must be no lower than the average level of all loans and the increment no lower than that of the same period last year.

The "Opinions" point out that it is necessary to expand the financing increment for small and micro enterprises while revitalizing existing stock, and to increase the share of loans to small and micro enterprises in new credit. The assessment measures for the "two no less than" targets should be further refined, with regular assessment, reported on a monthly basis, of indicators such as the loan ratio, loan coverage rate, service coverage rate and application approval rate for small and micro enterprises at banking financial institutions.

In fact, one important reason why financing is difficult for small and micro enterprises is the difficulty of providing collateral and guarantees. Previously, a report on the financial needs and satisfaction of small and micro enterprises released by the China Association of Individual Workers and Private Enterprises showed that, although small and micro enterprises regard banks and other financial institutions as a source of financing, most of them said that financing from banking institutions, especially state-owned commercial banks, is still relatively difficult. The surveyed enterprises said this was due both to their own factors - poor performance, lack of property that can be mortgaged or pledged, difficulty in meeting the guarantee conditions required by banks and unfamiliarity with the procedures for financing loans - and to factors on the side of the banks, such as excessively high credit access conditions in terms of asset scale and credit rating, the lack of credit products specifically tailored to the characteristics of small and micro enterprises and unreasonably designed business processes.

In this regard, the "Opinions" emphasize the need to establish and improve a financing guarantee system that mainly serves small and micro enterprises, with local people's governments taking equity stakes in and holding controlling interests in some guarantee companies, establishing government-led re-guarantee companies with the province (autonomous region, municipality) as the unit, and creating credit risk compensation funds for small and micro enterprises.

The introduction of the above "Opinions" by the State Council means that local government guarantees for the financing of small and micro enterprises will soon see substantive action. "If local governments can take equity stakes in and control guarantee companies in the future and provide more guarantees for small and micro enterprises, banks will also be more willing to lend," a person in charge at a state-owned bank said bluntly.

At the same time, Jing Linbo, vice president of the National Academy of Economic Strategy of the Chinese Academy of Social Sciences, once suggested that the financial entities serving small and micro enterprises should first be clearly defined and financial services from private banks and joint-stock banks should be encouraged; banks should segment the market, innovate credit products targeting small and micro enterprises and build a professional team to serve them.

In addition, the "Opinions" put forward a number of opinions supporting the financing of small and micro enterprises, including accelerating the enrichment and innovation of financial service methods for small and micro enterprises, focusing on strengthening credit enhancement services and information services for small and micro enterprises, actively developing small financial institutions, vigorously expanding direct financing channels for small and micro enterprises, effectively reducing the financing costs of small and micro enterprises and increasing policy support for financial services to small and micro enterprises. It particularly points out the need to appropriately relax the financial access standards of the ChiNext market for innovative and growth-oriented enterprises and to launch refinancing for listed small and micro enterprises as soon as possible. A sound National Equities Exchange and Quotations system should be established, product innovation intensified and financing varieties suitable for small and micro enterprises increased.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-361878.html