The Chonqging Science Commission, the Chongqing Finance Bureau, the Chongqing Finance Office and the Chongqing Intellectual Property Bureau recently launched a policy to back up medium and small sized companies whose funds come from intellectual property rights, the Chongqing Daily reported.

Those entitled to the funds are limited to small and medium sized science and technology companies that have registered in Chongqing Municipality and hold IP rights for layout designs of integrated circuits.

One way is that companies get funds directly from financial institutions such as banks pursuant to their intellectual property rights.

Another way is that companies mortgage their intellectual property rights to financial security agencies in exchange for funding from banks.

Chongqing will establish a financial risk compensation mechanism. The municipal financial authority will compensate up to 30 percent of the debt if the companies are not able to pay back the mortgaged funding. However, the compensation will not exceed 1.5 million yuan ($237,000).

County level government, industrial authorities, and industrial park administrations are encouraged to offer debt to support medium and small enterprises applying for financing pledged by IP rights.

The Chongqing Municipal Fiscal Technology Fund allocated 25 million yuan as risk compensation. Meanwhile, Chongqing will also explore new ways to compensate financial institutions in case companies are not able to repay their debt.