A special incentive fund for Chinese micro and small businesses is being prepared by the Ministry of Finance, local media reported on Tuesday. The goal of the $290 million (2 billion yuan) fund is to support financing for startups and growing businesses.
According to Caixin Global, the funding program will cater to 60 Chinese cities. Local authorities will receive the finances, to be forwarded to financial institutions so they can provide services to small and micro-enterprises.
The funds can only be accessed by local governments that meet certain criteria laid out by the ministry. Tests and assessments will be performed to ensure that cities that will receive funding support pass all requirements.
While there are requirements to be followed before funding is provided, the goal is to promote proper business setups and business practices that abide by the law.
Beijing has been encouraging local authorities to explore possible solutions for private small companies that need financial assistance so they can set up their businesses. The Chinese government also wants to achieve these goals while ensuring that risks are managed accordingly.
Over the past decade, China has been exploring options for funding small businesses that display great potential in succeeding or making it big in the massive Chinese market. Beijing wants to support causes that benefit citizens while helping boost the economy.
Several organizations and banking institutions have also forged partnerships in a bid to further improve financial services for growing enterprises in the country. One of these is the partnership between Zhong Lian Jin An Insurance Brokers Co. Ltd. (ZLJA) and China Lending Corporation.
Under the deal, the two firms will leverage on their finance experience to customize financing products for customers in the country. Since ZLJA focuses on insurances, China Lending will help with market resources to help explore improved services for customers and businesses.
Another notable breakthrough in China's finance sector is the four-year-old loan machine brought to life by the founder of the country's biggest online retail giant, Alibaba. Jack Ma's loan machine allows small and medium enterprises (SMEs) to obtain financing if they can't borrow from banks.
The MYbank loan machine has already hit a record 2 trillion yuan ($290 billion) in financial support for small companies ever since it was established in 2015. Almost 16 million SMEs have been assisted, records reveal.
China's finance sector has changed for the better over the past years as Beijing works hand in hand with bigger companies to help boost support for smaller businesses. It is expected that more businesses will receive financing in the coming years as the government seeks to help establish companies worth the investment.
