In an effort to increase funding for the technology and innovation business, China’s finance ministry announced on Friday that it would increase support for small and medium-sized tech companies through its regional financing ensure account.
Beijing is promoting innovation in vital industries and is pursuing modern self-reliance.
For tech-innovative small and medium-sized enterprises ( SMEs ), the risk-sharing ratio of the National Financing Guarantee Fund will increase from 20 % to a maximum of 40 %, according to a statement on the finance ministry’s website.
That means the bank can then handle up to 40 % of a borrower’s value in the event of a default, providing a stronger security net for loans.
According to the statement, the move aims to ease financing issues that small tech firms face because they lack effective collateral and struggle to meet businesses ‘ lending criteria.
It would link banks to raise funding assistance for such enterprises, leverage more financial resources to invest in scientific innovation, and give strong support for achieving high-level modern self-reliance, it added.
The finance ministry and 20 financial institutions established the fund in 2018 with an initial registered capital of 66.1 billion yuan ($ 9.12 billion ). It aims to offer financing ensure aid to SMEs, agricultural and modern businesses, according to the bank’s website.
