Around 32,000 companies in China's Hubei province were able to take advantage of the government-led financial aid program. The companies managed to obtain an estimated 20.6 billion yuan or roughly $2.9 billion worth of loans with a low-interest rate of 4.52 percent.
The Wuhan branch of the People's Bank of China (PBOC) stated on Saturday that the loans should come a long way in aiding businesses to resume operations following the months-long lockdowns. Apart from the substantial loans to help businesses recover, twelve banks in the province have also agreed to stretch their lending quotas by an additional 34 billion yuan.
PBOC Wuhan branch head, Wang Yuling, stated that the extended special re-lending quotas are supporting more than 800 key enterprises in the province, all of which were heavily hit by the coronavirus response and were involved in outbreak response during its peak.
Small to medium-sized firms that were experiencing liquidity problems were also offered loan principal repayment schemes. Around 33 banks in the region offered deferred payments of loans amounting to an estimated 687.1 billion yuan. The PBOC added that penalty interests and other charges were removed to ease the financial burden on the heavily affected companies.
The latest measures are part of a much wider effort made by the Chinese government to support ailing enterprises affected by the global pandemic. At the beginning of the outbreak in January, the PBOC had allocated more than 300 billion yuan in special lending quotas for companies that were actively playing a role mitigating the spread of the virus.
In February, the PBOC issued another 500 billion yuan of lending and rediscount quotas for micro to medium-sized businesses. The much smaller and more susceptible businesses were provided loans with interest rates below 4.55 percent.
The Hubei branch of the Industrial and Commercial Bank of China had stated that they have already issued loans of more than 4.78 billion yuan to over 100 key enterprises in the region as of March. The Hubei branch of the Agricultural Bank of China stated that they have issued loans of over 6.6 billion yuan to key enterprises as of April 15.
The interest rates of the loans issued to key companies since the start of the outbreak have also been lowered by around 63 basis points. Interest rates charges to micro to medium-sized business are significantly lower, hovering at around 75 basis points lower compared to the rates charged last year.
Apart from the additional funds and the lowered interest rates, banks have also established green channels that allow companies to more quickly acquire loans. Companies that utilize the channels will not have to be rated by the banks and fewer documents will be required for approval.
