China Boosts Support for Tech SMEs with National Financing Guarantee Fund

China's finance ministry announced an enhancement to its national financing guarantee fund to support small and medium-sized technology enterprises. The move seeks to foster innovation and technological self-reliance by increasing the risk-sharing ratio to 40%, thus providing a stronger safety net for lenders and easing financing difficulties for SMEs.

China's finance ministry has declared significant enhancements to its national financing guarantee fund to bolster small and medium-sized technology enterprises. The initiative is aimed at fostering innovation and achieving technological self-reliance, the ministry revealed on Friday.

Beijing will increase the risk-sharing ratio of the National Financing Guarantee Fund from 20% to a maximum of 40%. This means the fund can now cover up to 40% of a loan's value in case of default, offering a robust safety net for lenders. This move intends to alleviate financing challenges faced by tech SMEs lacking substantial collateral and struggling to secure bank loans.

The initiative is expected to guide banks in enhancing financing support for these enterprises, attract more financial resources towards technological innovation, and fortify efforts towards high-level technological self-reliance. Established in 2018 with an initial registered capital of 66.1 billion yuan ($9.12 billion), the fund aims to support SMEs, agricultural, and innovative enterprises, the ministry stated.

(With inputs from agencies.)