On February 17, Chongqing local financial supervision and Administration Bureau issued the notice on guiding small loan companies to support epidemic prevention and control and do a good job in real economic and financial services (hereinafter referred to as the notice). According to the notice, small loan companies should be supported to make full use of 2.3 times of financing leverage. If they support the special needs of real enterprises, especially small and medium-sized enterprises, with the approval of the Municipal Financial Supervision Bureau, they can appropriately improve and enlarge the support for epidemic prevention and control; they should guide small loan companies to carry out financing in accordance with laws and regulations, and calculate leverage multiple for each financing. The notice is tentatively valid for the end of June 2020.
We think its very good to have such a policy. The company is now using twice the leverage, and may apply to the regulatory authority for improvement in this period of time, but the specific amount needs to be discussed internally, and its not sure whether it can be approved, because the regulatory authority also depends on the qualification of small loan companies and other conditions. Chairman of a small loan company in Chongqing told the economic observer.
Coincidentally, Guangdong, Shandong and other places have also introduced similar regulations to moderately relax the financing leverage of excellent small loan companies. On February 13, the opinions on strengthening financial services for small and medium-sized enterprises to support epidemic prevention and control and promote stable economic development issued by Guangdong financial regulatory bureau and other five departments pointed out that the financing balance of small loan companies with excellent regulatory indicators and active participation in epidemic prevention and control can be relaxed to no more than 5 times of net assets (i.e. to 5 times of leverage) with the approval of Guangdong local financial regulatory bureau The upper limit of single loan balance is raised to no more than 5% of the registered capital and no more than 10 million yuan. Among them, the balance of the funds incorporated by non standardized financing methods such as bank, small amount re loan company and corporate shareholder loan shall be relaxed to no more than 2 times of the net assets; the balance of the funds incorporated by standardized financing tools such as issuing bonds and asset securitization products in Shanghai and Shenzhen Trading places shall be relaxed to no more than 3 times of the net assets, and the validity period of this article shall be six months from the date of promulgation.
Liu Zhixiang, Secretary General of Guangzhou Small Loan Industry Association, told the economic observer that previously, Guangdong small loan companies had a maximum leverage of one time, and could only finance from two banking institutions. The newly released policy adopted a combination of two times of non standardized financing + three times of standardized financing, and did not limit the number of financing banking institutions. At present, high-quality small loan companies in Guangzhou have been approved by the regulatory authorities and agreed to lend to 5 times the leverage.
On February 21, Shandong financial regulatory bureau also issued a notice that it will moderately relax the financing leverage of excellent small loan companies to five times; meanwhile, it will adjust and optimize some regulatory indicators of single loan balance ceiling of small loan companies, such as single loan balance ceiling does not exceed 5% of net assets and does not exceed 10 million yuan, etc., and the validity period of the policy is also six months. In the original Guangdong policy, the loan balance of the same borrower shall not exceed 5% of the net capital of the small loan company, and the upper limit of the loan balance is 5 million yuan, which often cannot meet the financing needs of small and medium-sized micro enterprises. After the policy is relaxed, small loan companies can better serve small and medium-sized enterprises. For small loan companies, it is shareholders own funds to lend, internal risk control management should be done well, and their own responsibilities should be borne by themselves. Liu Zhixiang said.
Although Chongqing regulators have some tolerance for the non-performing loan rate index of small loan companies during the period affected by the epidemic, the chairman of the above-mentioned small loan companies in Chongqing still has a little worry. He told the economic observer that the epidemic has a great impact on small and micro enterprises, and may further affect the asset quality of small loan companies. The overdue rate is not yet estimated.
Timely policy rain
In recent years, the credit business of financial institutions has accelerated the retail transformation, but the small loan industry is an exception. In addition to the rise of a small number of small loan companies supported by internet background and traffic, the vast majority of small loan companies, especially local small loan companies, still focus on public business, which is an important complementary force of Inclusive Finance.
Xue Hongyan, director of Internet Finance Center of Suning Financial Research Institute, thinks that at present, banking industry plays a pillar role in financial anti epidemic, but there are a large number of small and micro enterprises in China, and many of them cant reach the application threshold of bank loans, and there is no lack of sound of financial support from small and micro enterprises in the market. In this context, give full play to the location advantages of small loan companies And professional advantages, with important value. Small loan companies have been limited by capital leverage requirements for a long time, and their lending capacity is limited. If they want to play a better role in the epidemic, it is necessary to appropriately increase the leverage ceiling, which can fully release their loan delivery capacity, and help more small and micro enterprises to tide over the difficulties. It is expected that more places will promote similar relaxation policies in the future. Xue Hongyan said.
According to the statistical data report of small loan companies released by the central bank in the third quarter of 2019, by the end of September 2019, there were 7680 small loan companies in China, with a loan balance of 928.8 billion yuan, and a decrease of 25.7 billion yuan in the first three quarters. In the process of rapid development of Chinas small loan business and small loan companies, they also face great problems, forming a bottleneck restricting the development of small loans.
Qi Jian, a senior banker, once wrote an article pointing out that there are two main challenges faced by the microfinance industry. First, the positioning of small loan companies is unclear. Small loan companies are approved and supervised by financial offices of various provinces and cities, but they are not included in the supervision system of financial institutions. Small loan companies are between financial institutions and non-financial institutions, and they are engaged in financial institutions as non-financial institutions Secondly, the obstruction of capital channels and financing leverage has become the soft rib of the rapid development of small loan companies. The capital source of small loan companies is mainly capital, which can not attract public deposits and funds. This kind of financing difficulty has become an important factor hindering the development of small loan companies since their development.
In addition, the guidance on the pilot of small loan companies stipulates that within the scope of laws and regulations, the balance of the small loan companies funds from banking financial institutions shall not exceed 50% of the net capital.. This makes it difficult for most small loan companies to obtain financing from banks, leading to the small scale of small loan companies.
In order to break this bottleneck, Chongqing took the lead in liberalizing the financing leverage ratio of small loan companies in June 2012, relaxing the on balance sheet leverage ratio to 2.3 times, and allowing small loan companies to transfer assets through local financial asset trading venues. Since then, Guangdong, Hainan, Hunan and other provinces and cities have also revised the financing proportion of small loan companies.
This time, the leverage ratio of small loan companies increased, which can make small loan companies reduce unit operating costs, obtain better return on net assets, reduce the loan interest rate for small and medium-sized micro enterprises and increase the loan supply for small and medium-sized micro enterprises. The biggest obstacle for small loan companies to break through the last mile is the lack of funds. The financing channels of small loan companies have been relaxed and the leverage has been improved, which will be more conducive to the high-quality development of small loan companies, and further solve the problem of financing difficulty and high cost of small and medium-sized micro enterprises, especially for small loan companies and small and medium-sized micro enterprises affected by the epidemic, which is no different from a timely rain. Liu Zhixiang said.
However, she also told the economic observer that not all small loan companies can enjoy such policies. The regulatory authorities will assess the qualifications of the small loan companies applied for, and the application pass rate will be higher for enterprises with higher rating scores and higher quality in all aspects. For some leading small loan enterprises, where the business scale is relatively large, the amount of capital is almost used and there is a need to enlarge the leverage ratio of financing, the probability of application for approval is very high; however, if the amount of money is not used up, the scale is not large and the business development is not so good, the regulatory authorities will not approve the application in principle.