A number of small and medium-sized enterprises (SMEs) in Guiyang, capital of Southwest China's Guizhou province, have successfully avoided bankruptcy thanks to a helpful emergency re-lending policy launched by the local government in April.
Companies are eligible to receive an emergency fund at designated banks to repay previous loans as long as they: a) qualify as a SME; b) are based in Guiyang; c) produce legal products; d) are in good operating condition and e) have the ability to pay back the loan.
Y Dai Food, a local food company which specializes in producing pickles, was struggling to repay a 1.5 million-yuan ($217,953.6) loan. With the emergency re-lending policy, it raised 20 percent of the fund and then applied to receive the remaining 1.2 million yuan, which saved them 300,000 yuan in bridge loans.
Currently, Guiyang has 230,000 registered companies, most of them being SMEs facing financial difficulties.
To further help the SMEs, the latest version of the policy canceled the requirement for companies to raise 20 percent of the fund and will increase the fund to 200 million yuan by 2022. This policy will be valid until the end of 2022.
The policy will reduce the financial cost of the companies, enhance the market vitality of SMEs, and realize win-win development for both banks and companies, said Qiu Jun, an official of the Guiyang industry and information commission.
According to data, since the launch of the policy, the government has invested 50 million yuan into the financial fund and issued 29 loans. A total of 292 million yuan in emergency funds has been spent, with a turnover rate of 5.83. The largest loan was 20 million yuan, and the smallest was 800,000 yuan.
