The Information Office of Guangdong on July 17, held a press conference to issue several policies and measures on supporting the financing of SMEs in Guangdong. The policies include 22 specific measures to solve financing problems for small and medium enterprises (SMEs).
Three major problems facing SMEs
In Guangdong, SMEs face three major problems, according to He Xiaojun, Party Secretary and Director General of Guangdong Provincial Financial Administration. These include difficult financing, expensive financing and slow financing. Difficult financing is mainly caused by blocked channels, asymmetric information and refinancing difficulties. Expensive financing results from high risk compensation and implicit cost. Low efficiency of financing procedures and mortgage registration have given rise to slow financing.
The biggest problem lies in information asymmetry, which either excludes enterprises from financing market or provides insufficient service for them. In order to solve this problem, Guangdong has started building a financing platform based on the data and technologies of digital government.
Guangdong also proposes to improve the intellectual property financing system for SMEs and encourage local financial organizations to support SMEs during the process of refinancing and mortgage registration.
Establishing credit evaluation system based on digital government
One part of the new policies involves the establishment of a credit evaluation system of SMEs, and is aimed at solving the problem of information asymmetry. The financing platform should be able to offer smart financing services such as information collection, credit evaluation, information sharing and risk compensation. The platform has successfully made the first loan to an enterprise and will be officially launched in September.
According to Guangdong officials, financing service system for SMEs is an open ecosystem which integrates all the financial elements including data, technologies, interest subsidies and supervision.
Guangdong has provided risk assessments for 11 million SMEs, which examine not only bank credit information but also water and electricity usage information. Information such as water usage and bills payment often reflect the conditions of enterprises.
Guangdong also plans to develop a multi-level capital market to broaden the direct financing channels for SMEs. Four measures have implemented to achieve this goal including decreasing the cost of reorganization listing, improving the regional equity market, encouraging equity investment, acquisition and restructuring, and promoting bond financing.
Guangdong also plans to continue improving the financing service system, setting up provincial banks for SMEs and "farmer, countryside and agriculture", promoting financing guarantee systems and petty relending as well as creating a healthy environment for the development of financial organizations.
In terms of reducing financing cost, the policies propose to make full use of relative policies, banks designed for strategic development, and capital created through the development of the GBA.
As to enhancing the efficiency of financing, it is advised to optimize online functions, establish intelligent service and evaluation systems and meanwhile dispose non- performing assets more efficiently.
Authors: Will, Pu Enling