China boosts financing support for smaller innovative tech companies

BEIJING (Reuters) - China will enhance support for small and medium-sized technology enterprises through its national financing guarantee fund, the finance ministry said on Friday, in a bid to leverage more  funding for the technology and innovation sector.

Beijing is working towards achieving technological self-reliance and is fostering innovation in key industries.

For tech-innovative small and medium-sized enterprises (SMEs), the risk-sharing ratio of the National Financing Guarantee Fund will increase from 20% to a maximum of 40%, according to a statement on the finance ministry’s website.

That means the fund can now cover up to 40% of a loan’s value in the event of a default, providing a stronger safety net for lenders. 

The move aims to ease financing difficulties faced by smaller tech companies that lack effective collateral and struggle to meet banks’ lending requirements, the statement said.

It would guide banks to increase financing support for such enterprises, leverage more financial resources to invest in technological innovation, and provide strong support for achieving high-level technological self-reliance, it added.

The fund was set up in 2018 by the finance ministry and 20 financial institutions with an initial registered capital of 66.1 billion yuan ($9.12 billion). It aims to offer financing guarantee support to SMEs, agricultural and innovative enterprises, according to the fund’s website.

($1 = 7.2508 Chinese yuan renminbi)

(Reporting by Ziyi Tang, Ethan Wang and Liz Lee; editing by Christina Fincher, Kirsten Donovan)