Interest rate of new, existing loans falls to less than 5% for majority of companies

Government data show that the effective comprehensive interest rate of new loans and existing loans dropped to less than 5 percent for 51 percent of enterprises in China after the novel coronavirus outbreak, a regulatory official said on Friday.

The China Banking and Insurance Regulatory Commission again asked financial institutions to increase credit issuance to upstream and downstream private small businesses in the supply chain and lower their financing costs, for these companies are weak in terms of risk resistance.

Currently, a total of 22 million micro-, small- and medium-sized enterprises, including small business owners and individually owned businesses, have bank loans, and 14 million of them are individually owned businesses, said Yang Liping, chief inspection officer of the commission.

"We will continue to require banks to increase credit support for small businesses at lower prices, and we will also consider including banks' performance in offering loans to new small business clients in our evaluation system," Yang said at a news conference held by the State Council Information Office.

The banking and insurance regulator required large State-owned commercial lenders to try their best to increase their loans to small businesses with a total credit line of up to 10 million yuan ($1.43 million) for each borrower by no less than 30 percent year-on-year in the first half of 2020.

This year, various financial institutions in the banking sector will also try to increase their loans to individually owned businesses by more than 500 billion yuan altogether from the previous year, she said.

In 2019, China's new loans to private enterprises hit 4.4 trillion yuan. The number of businesses that received loans increased by 31.5 percent year-on-year. The annualized interest rate of total loans issued last year dropped 93 basis points year-on-year, and the proportion of new medium- and long-term loans to new loans in total reached nearly 70 percent, according to the China Banking and Insurance Regulatory Commission.