The latest interest-rate cut by the People's Bank of China - the central bank's fifth such reduction in nine months - is a boon to many of Shenzhen's small and micro-sized enterprises that are desperate for loans but yet bogged down by collateral problems.

Lu Xianping, chief executive officer of Shenzhen-based Chipscreen Biosciences, was delighted with the new rate cut. He recalled having to shuttle between major cities on the mainland for a bank loan, but to no avail for the simple reason it could not come up with the required collateral.

The turning point came when a Shenzhen bank turned good Samaritan and went to the rescue of the company, which was on the verge of giving up on producing a new medicine because it had no money to finance a new production line. Chipscreen was granted a credit line of 100 million yuan ($15.6 million).

"There's almost no city on the mainland that can match the services of Shenzhen's finance organizations in helping high-tech, small and micro-sized companies," he said.

In the first half of this year, 201,200 such companies in Shenzhen had secured loans from banks - up 27.75 percent over the same period last year - according to the Shenzhen Municipal Government Financial Services Office (SZFSO).

Hai Ou, director of strategic affairs department at Chipscreen, told China Daily: "This bank is undergoing financial reform and very bullish about the prospects of high-tech entities."

She believed the reason why Chipscreen was chosen as a pilot project for the bank's financial reform is that the company has a stable management team with more than 70 patents globally.

According to the SZFSO, total loans granted to small and micro-sized companies in the city reached 455.5 billion yuan by the end of June - an increase of 15 percent, compared with the same period last year.

The success rate of loan applications was about 85 percent - up 6.39 percent.

Since January this year, the number of small and micro loans extended shrunk at most branches of China Minsheng Banking Corp (CMBC) across the mainland. But, CMBC's Shenzhen branch saw its small- and micro-loan business surge to 5.6 billion yuan by the end of July - the highest among all of the bank's branches.

To deal with the high risk of lending to micro-sized businesses, CMBC Shenzhen teamed up with a third-party credit reporting platform.

Xu Libin, general manager of the branch's small and micro-sized business credit review department, said: "The platform can help us solve the problem of asymmetric information on borrowers' tax, customs, debt, lawsuit and investments, at a relatively low cost."

But many small and micro-sized companies are still bogged down by the headache of financing. In other words, the micro-loans market remains huge.

Shenzhen's National Bureau of Statistics Survey Office said that among 1,376 sample companies, 21.5 percent were in need of financing during the second quarter of 2015, but 90 percent of them failed to secure loans and none of them managed to meet all their financing needs.

Shenzhen is exploring various channels to raise funds for the development of small and micro-sized businesses. So far, more than 100 micro-loan lenders have opened to business, offering loans of 129 billion yuan in total.

Micro-financing companies have, to date, serviced more than 200,000 small and micro-sized enterprises with total loans reaching 19 million yuan.

The average single loan in the micro-loan industry is about 140,000 yuan - the country's lowest - but its unsecured loan portion has topped the list nationwide, accounting for 64 percent of all categories of loans extended.

grace@chinadailyhk.com

(HK Edition 08/27/2015 page7)