A FINANCING guarantee company wholly owned by the Shenzhen Municipal Finance Bureau has so far assisted Shenzhen’s micro, small and medium-sized enterprises (MSMEs) in receiving loans exceeding 10 billion yuan (US$1.36 billion), effectively solving the financing difficulties these companies face, Shenzhen Special Zone Daily reported.

Banking institutions have long favored cooperation with State-owned guarantee institutions due to concerns about the repayment of overdue noncredit loans. However, Shenzhen has fewer than 10 State-owned guarantee institutions, leaving many MSMEs with insufficient access to financing guarantee services.

In response to this gap, Shenzhen Financing Guarantee Fund Co. Ltd. has stepped in to assist insurance institutions and private guarantee institutions by offering credit enhancement services, thereby complementing the efforts of State-owned guarantee institutions.

One notable success story is the partnership between GUOREN P&C, an insurance company, and the government-owned financing guarantee company. Since entering into a cooperation agreement, GUOREN P&C has successfully underwritten 32,000 small loans amounting to approximately 8.5 billion yuan, according to the Daily report.

Another guarantee company, Leaguer Technology, has also benefited from Shenzhen Financing Guarantee Fund’s credit enhancement support, securing over 1 billion yuan in bank credit annually.

Moreover, Shenzhen Financing Guarantee Fund actively engages in risk sharing with its partner institutions, providing 20% to 50% risk-sharing support for their guarantee and guarantee insurance businesses. From 2020 to 2022, the ratio increased by 10 percentage points, reaching up to 60% for loans below 10 million yuan obtained by small and micro enterprises.

As of the end of July this year, the company had handled a total of 222 compensation projects on behalf of its cooperating institutions, disbursing 44.93 million yuan in compensation funds. The support has effectively mitigated the compensation losses incurred by these institutions, alleviating their financial burden.

Additionally, the company has actively guided its partner institutions in reducing fees to ease the operational burdens on businesses.

In June, the company announced a special initiative, offering its cooperating institutions a 60% discount on re-guarantee fees for small and micro enterprise loan projects with a loan period between Jan. 1 and Dec. 31, 2023, and a guarantee rate of no more than 1% per year.

(Zhang Yu)