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Policy-Backed Guarantee and Subsidized Loans are Key Tools for Supporting Small- and Medium-Sized Enterprises: References Drawn from the Experience of the United States, Japan, Germany and Britain (No.150, 2020)
2020-07-30
By Ma Yuan, Ma Shuping, Xu Yingjie, Yuan Dongming & Ma Jun, Enterprise Research Institute, DRC
Research Report, No.150, 2020 (Total 5894) 2020-6-18
Abstract: Small- and medium-sized enterprises (SMEs) are key sectors for the provision of employment opportunities and ensuring people’s livelihood. Since the outbreak of novel coronavirus epidemic, the United States, Japan, Britain and Germany have all launched projects of subsidized loans with government-related guarantee as a pillar relief policy for SMEs, which can provide strong support with long-term loans and low interest rate. The enterprises enjoy 1-2 years’ interest free loan and the government share over 80 percent of the risks. However, the amount of loans for an enterprise to borrow should be balanced with its daily expenditure and the limit for debt ceiling is fixed. These measures can mobilize relevant institutions in a short time to approve massive applications for money borrowing. China has taken various ways to support SMEs while the roles of government-related guarantee and subsidized loans remain to be enhanced. Related departments need to make policy-backed guarantee and subsidized loans play a dominant role in supporting SMEs, reduce or cancel the requirements on profits by government guarantee institutions, improve mechanisms to ensure no one who has fulfilled his duties will be held liable for anything beyond his control, clarify loan application standards and procedures and establish an efficient and connective implementation mechanism. In addition, efforts are to be made to improve information sharing mechanisms among enterprises, enhance risk control capabilities through big data, and enforce credit and regulatory restraints to forestall fund risks.
Keywords: policy-backed guarantee, subsidized loans, support small-and medium-sized enterprises
