A comprehensive package of incremental policies provides all-round support for the development of enterprises, among which the optimization measures for the debt-free loan renewal policy benefit a large number of enterprises and individual businesses.
"Optimizing the debt-free loan renewal policy helps business entities alleviate difficulties in capital turnover. The scope of this policy not only includes small and micro enterprises but also extends to medium-sized enterprises in a phased manner," said Deputy Director of the State Financial Regulatory Administration, Cong Lin, at a recent press conference held by the State Council Information Office on increasing support for enterprises.
Chen Dayun, an expert in corporate credit services, told reporters that the debt-free loan renewal policy has solved the "loan flipping" problem for many enterprises and individual businesses. Some small and micro enterprises find it difficult to obtain medium and long-term operational loans from financial institutions, and they usually handle more short-term liquidity operational loans such as tax loans, bill loans, and loan guarantees, which do not exceed one year. Therefore, they face the situation of repaying and re-borrowing loans every year when the loans mature. The optimized policy of debt-free loan renewal has targeted and solved this problem.
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Actively responding to the policy,
On September 24, the Financial Regulatory Administration issued further optimization of the debt-free loan renewal policy for small and micro enterprises, promoting the quality and efficiency of financial services for small and micro enterprises. The main content of the "Notice" includes: expanding the scope of loan renewal from some small and micro enterprises to all small and micro enterprises, and clarifying that working capital loans for small and micro enterprises, as well as operational loans for small and micro enterprise owners, individual businesses, and farmers, can all be renewed.
Reporters learned that after the issuance of the relevant optimization policies, financial regulatory bureaus in various places actively promoted the deployment and arrangement of related work. The Zhejiang Financial Regulatory Bureau issued a notice requiring a timely investigation of the loan renewal needs of small and medium-sized enterprises and supporting loans that meet the conditions to "renew as much as possible"; the Lishui Financial Regulatory Branch issued a notice to promote the implementation of the debt-free loan renewal policy and improve the level of financial services for small and micro enterprises; the Chongqing Financial Regulatory Bureau provided on-site guidance to large local banking institutions to establish a green channel for loan renewal, urging banking institutions to introduce detailed rules for debt-free loan renewal operations as soon as possible, clarifying entry and review standards, strengthening risk monitoring and management, improving the due diligence exemption method, and promoting the compliance and efficient conduct of loan renewal business. It is required to connect with loan customers one month in advance, to conduct preliminary investigation and evaluation for those who need loan renewal, and to improve the quality and efficiency of loan renewal services.
Banking institutions are also actively implementing the policy. On October 11, a person in charge of Qingnong Commercial Bank (002958.SZ) pointed out: "Our bank is revising the debt-free loan renewal management method according to the requirements of the 'Notice'. On the basis of the original management method, first, the loan amount limit for small and micro enterprises is canceled, second, medium enterprise loans and farmer operational loans are included in the scope of debt-free loan renewal services, and third, the support time for medium enterprise loan renewal is clarified. After the internal method is formulated, the product will be updated on the official website homepage. For existing loan customers, the main customer manager will take the initiative to contact the enterprise one month before the loan expires to understand the loan renewal needs."
Yunong Commercial Bank (601077.SH) stated that it will adjust the loan renewal conditions in a timely manner according to the new policy and further expand the applicable subjects to medium enterprise working capital loans expiring before September 30, 2027. Those who meet the conditions can also handle "self-service loan renewal" online through corporate online banking or mobile banking. At the same time, branches actively connect with existing loan customers and increase the promotion of loan renewal.
Regarding the loan renewal issue for small and micro enterprises, as early as 2014, the former China Banking Regulatory Commission issued the "Notice on Improving and Innovating Small and Micro Enterprise Loan Services to Improve the Level of Financial Services for Small and Micro Enterprises" (China Banking Regulatory Commission [2014] No. 36), proposing that for small and micro enterprises with temporary financial difficulties that still have financing needs when the working capital turnover loan expires, banks and financial institutions can carry out loan investigation and evaluation in advance according to the requirements for new loans upon their active application. Small and micro enterprises that meet five conditions can handle loan renewal after being reviewed and approved by banks and financial institutions.
Some regions have announced the scale of debt-free loan renewal loans. Information published by the Lishui Financial Regulatory Branch shows that since 2014, the original Lishui Banking Regulatory Bureau of the Lishui Financial Regulatory Branch has strengthened regulatory guidance and promoted banking institutions to implement the original Banking Regulatory Commission's notice on improving and innovating financial services for small and micro enterprises to improve the level of financial services for small and micro enterprises. As of the end of August this year, the balance of debt-free loan renewal for small and medium-sized enterprises, including individual businesses and small and micro enterprise owners, in Lishui city is 38.179 billion yuan, a year-on-year increase of 24.93%. The number of small and medium-sized enterprises (including individual businesses and small and micro enterprise owners) with debt-free loan renewal, loan balance households is 23,600, a year-on-year increase of 16.57%.Information disclosed by the Xiamen Financial Regulatory Bureau indicates that efforts have been made to encourage banks to simplify the process of loan renewal, gradually increase the proportion of loan renewal business in small and micro enterprise loans, and assist enterprises in seamless financing turnover. As of the end of September 2024, the balance of loan renewal without principal repayment in banks under its jurisdiction exceeded 110 billion yuan, and more than 20 billion yuan has been processed for loan renewal without principal repayment for 60 medium-sized enterprises.
Reducing the "evergreening" cost for enterprises
The issuance of the "Notice on Loan Renewal without Principal Repayment" will address multiple concerns of small and micro enterprise owners.
Chen Dayun told the reporter: "Previously, many loan businesses originated from 'evergreening' users after the maturity of bank loans. On one hand, the 'evergreening' behavior of enterprise owners after the maturity of loans affects the arrangement of funds, and on the other hand, there is also concern about whether the bank will cut off loans after repaying the principal and then applying for a new loan. Some enterprise owners have also considered directly extending the term upon maturity, but this also poses the issue of banks downgrading the enterprise's risk rating, which will affect future enterprise loans."
"Reducing the 'evergreening' cost for enterprises is the greatest benefit to enterprises after policy optimization," Chen Dayun believes that the term of short-term liquidity operating loans for small and micro enterprises is usually within one year, and it is necessary to repay the principal and then renew the loan after maturity. However, enterprises cannot repay the principal in full due to fund turnover and other reasons after the loan matures, and can only resort to private financing for "bridge financing" or loan intermediaries for borrowing new to repay old. After the optimization of the policy on loan renewal without principal repayment, enterprises can fully use loan funds for business activities to avoid increasing costs due to "evergreening."
Since the introduction of the policy on loan renewal without principal repayment in 2014, some banking institutions have had concerns. Firstly, it is not easy to control the specific scale of balancing business, risk, and compliance within the bank for loan renewal without principal repayment. From the perspective of risk and compliance, the attitude towards the business of loan renewal without principal repayment is more cautious. Secondly, due to the lack of certain financial management capabilities of small and medium-sized enterprises, some enterprises have poor financial data standardization and a short life cycle. The repayment upon maturity is an important means of risk prevention and control, and it is necessary to be cautious about turning loan renewal without principal repayment into a way to evade debt.
Recently, some experts have pointed out that further improvement of loan renewal without principal repayment requires strengthening risk management work, preventing short-term loans from being used for long-term purposes by loan enterprises, turning renewal into perpetual debt. Although there is no limit to the number of times enterprises can renew loans, banks still need to increase the post-loan management of renewed loans, strengthen on-site investigations and visits to loan enterprises, dynamically pay attention to the operation management, financial and fund flow of borrowers, and timely carry out risk assessment and early warning.
Liuyang Rural Commercial Bank believes: "Whether from the perspective of the overall policy direction adjustment or from the perspective of the difficulties in the operation of small and medium-sized enterprises, the relevant policy provisions are actually aimed at alleviating the financial pressure of loan enterprises, especially high-quality enterprises. Therefore, for small and micro enterprises that are in operation, maintaining good operating conditions and credit status, and with moderate debt, they can make good use of existing policies to maintain the benign development of enterprises and ensure the stability of enterprises."
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