Zhejiang rolls out new measures to support individual businesses

In a significant move to strengthen its dynamic private economy, East China's Zhejiang province has launched a new package of financial measures aimed at providing more support to its vast network of individual businesses.

Announced by the provincial authorities at a news conference on Dec 25, the policy package, comprising a total of 10 measures, will directly target some of the financing challenges and difficulties faced by these small-scale operators.

Individual businesses are the largest group of market entities in Zhejiang and they are an important part of the province's private sector, consistently playing a significant role in its economic development, said Shao Qianlong, deputy head of the Zhejiang Provincial Administration for Market Regulation, at the news conference.

"As a national leader in the private sector, Zhejiang is home to 7.49 million individual businesses, accounting for 64.4 percent of all market entities in the province," said Shao. "They are crucial for job creation, with over 11 million people employed in one way or another."

Shao emphasized the policy's focus on providing "inclusive, targeted and systematic" support to address common problems like limited access to credit in an accessible manner.

One of the measures, for instance, is the introduction of a digital solution designed to bridge the financing gap.

An online platform connecting all registered individual businesses with the province's banking networks will be introduced. A key feature is a "loan code" that users can scan with a smartphone to instantly submit loan applications.

"Individual business owners often do not know who or which institutions they can turn to get loans, while banks are unaware of potential borrowers," Shao explained. "The new platform will effectively overcome information asymmetry."

To help businesses that lack physical collateral, another measure will leverage a public data system to transform commercial credibility into a bankable asset.

"We are promoting a model that uses digital tools and credit profiling to facilitate lending," said Shao. This allows lenders to grant loans based on a business's operational history rather than traditional assets.

Intangible assets such as trademarks and patents will also serve as effective tools for business owners to secure loans, with more loan services to be offered to those with such intellectual property rights.

With a lower interest rate, more individual businesses will reap the benefits, said Yan Zhenyu, deputy head of the Zhejiang provincial branch of the People's Bank of China.

"From January to November last year, the loan interest rate for small and micro businesses in Zhejiang dropped by 0.45 percentage points year-on-year," he said."It is at a historic low."

In addition, the support is carefully calibrated, according to the news conference.

For new startups, low-threshold "entrepreneurship loans" are available. More established businesses can access flexible loan renewal schemes. For high-potential niche businesses, such as those recognized for their specialty or quality, banks will offer premium loan products with favorable terms.

CZBank, a commercial bank, for instance, will offer low-interest loans worth a total of 1 billion yuan ($143.4 million) to branded individual businesses.

Beyond credit, the package also includes measures to simplify cross-border settlements for small exporters and to promote tailored insurance products for individual businesses to lower their operational risks.