The People's Government of Bengbu City
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Methods for Management of Utilization of Special Funds for Loan Interest Subsidies and Risk Compensations to Small and Medium Sized Enterprises in Ben

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Methods for Management of Utilization of Special Funds for Loan Interest Subsidies and Risk Compensations to Small and Medium Sized Enterprises in Bengbu Proper (Trial)
(Abstract)
WZB (2009) No. 14
Issued by
Bengbu Municipal People’s Government Office

1.The special funds for loan interest subsidies and risk compensation from municipal government will be used to provide loan interest subsidies and loan loss compensations to small and medium sized enterprises established in Bengbu proper in accordance with laws, and provide loan loss compensations to various kinds of guarantors mainly providing loan guarantees for small and medium sized enterprises.
2.The loan interest subsidies are targeting at loans directly lent by financial institutions to small and medium sized enterprises in current period, with their repayment time being shorter than one year and their floating interest rates no higher than 30% of State stipulated benchmark interest rate. Enterprises enjoying the loan interest subsidies are limited to equipment manufacture, parts and components, electronic and information, fine chemical engineering, photovoltaic, biological and new material industries.
The loan loss compensation targets at direct losses for newly added loans suffered by small and medium sized enterprises. Such newly added loans are those clearly specified by financial institutions in the current period for the previous loans.
The standards for loan interest subsidies and loan loss compensations:
(1). Loan interest subsidies will be provided to loan borrowers with existing loans at hand for newly occurred loans. Such subsidies will be provided according to floating interest rate specified in the previous loan contract(subsidies will not be provided for the loan section whose interest rate exceeding floating interest rate specified in the previous loan contract);
(2). For loan borrowers who have borrowed new loans, interest subsidies will be offered for the new loans based on floating interest rate on the loan contract.
(3). Compensation equivalent to 10% of the direct loan loss will be offered. Borrowers getting loans through guarantors will get compensation equal to 15% of their direct losses.
3. Guarantee loss compensation targets at compensatory losses suffered by guarantors in the current period for new loans borrowed by small and medium sized enterprises, and reward which should be given to guarantors because their compensatory losses are lower in percentages than specified.
The compensation size for compensatory losses will be 1% of the balance of guarantee for new loans borrowed by small and medium sized enterprises in city proper, which has been provided by a guarantor in the current year. If guarantor’s compensatory loss is controlled to be lower than 1%, 30% of the compensation funds will be rewarded to the guarantor and the remaining 70% will be transferred to loss compensation funds for next year. The portion exceeding 1% will be covered by guarantor itself according to related financial rules.