Bank of China Ltd has lowered its credit threshold to small- and medium-sized enterprises and reduced their financing costs by promoting supply chain finance.

Jiang Xu, deputy general manager of the bank's Global Trade Services Department, said on Monday the lender is focusing on core suppliers and distributors of leading companies such as Huawei Technologies Co and Foxconn Technology Group.

By connecting its information system to the Enterprise Resource Planning system of some leading companies, the bank has a good understanding of the flow of capital, logistics and transactions between the leading companies and their core suppliers or distributors, Jiang said.

With more transparent information available to the bank on upstream and downstream SMEs in the industrial chain, small companies now receive loans at lower costs as the lender has a clearer vision of their financial situation, said Xu Yufa, who also works for the bank's Global Trade Services Department.

Some leading companies even used their own credit quota to support their core suppliers and distributors, thus helping them receive loans at favorable prices by keeping the risk of supply chain finance at a relatively low level.

With supply chain finance, core suppliers for Huawei Technologies received loans at a rate that was 10 to 20 percent lower than the lending rate they would receive if they applied for loans on their own, Jiang said.

By the end of 2014, Bank of China had provided loans to more than 8,000 SMEs closely related to leading companies through 500 supply chain finance projects. The amount of loans extended by the bank via supply chain finance increased to nearly 1 trillion yuan ($160 billion) last year from 74 billion yuan in 2009.

"Next, Bank of China will continue strengthening research on different industries to identify and explore the sub-sectors with huge potential of development and a strong ability to resist downward economic pressure," Jiang said.