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Digital Finance to the Rescue of SMBs

Feb 15-2020   



Many small and micro businesses (SMBs) have to face the grim reality that their operation is in limbo while rents and payrolls keep piling up. The scenario of running out of cash flow looms large. Fintech and digital finance should be tapped to help, writes Assistant Professor Huang Zhuo of the NSD for Caijing Online. He’s also the Deputy Director of the Institute of Digital Finance at Peking University.

 

In the area of digital inclusive finance, China is ahead of the pack. Nowadays, SMBs and residents can rely on mobile terminals to make transfers, apply for loans and buy insurance products, without having to leave offices or homes. This is an immense progress compared to banking possibilities during the SARS in 2003.

 

An online survey by Ant Finance shows that 80% of shop owners have financing gaps, and 70% believe that loans can tide them over current situations. Around half the SMBs need 10,000-100,000 yuan in financing, and one third have never had a loan before. It’s not an easy task to ensure that loans are accurately and efficiently matched with the most qualified SMBs. Digital finance can play a big role by tapping data, technology and platform advantages.

 

The PBOC has provided 300 billion yuan of low-cost ad hoc relending funds to major national and provincial banks, to be lent at favorable interest rates to firms producing medical and daily supplies. Prof. Huang suggests that an additional 200 billion yuan should be offered through small and medium banks and Internet banking to support SMBs that have incurred severe losses due to the epidemic. In addition, small and medium banks and internet banking platforms with good risk management should be allowed to create securitized products and reduce loan rates for SMBs.

Digital Finance to the Rescue of SMBs

Feb 15-2020   



Many small and micro businesses (SMBs) have to face the grim reality that their operation is in limbo while rents and payrolls keep piling up. The scenario of running out of cash flow looms large. Fintech and digital finance should be tapped to help, writes Assistant Professor Huang Zhuo of the NSD for Caijing Online. He’s also the Deputy Director of the Institute of Digital Finance at Peking University.

 

In the area of digital inclusive finance, China is ahead of the pack. Nowadays, SMBs and residents can rely on mobile terminals to make transfers, apply for loans and buy insurance products, without having to leave offices or homes. This is an immense progress compared to banking possibilities during the SARS in 2003.

 

An online survey by Ant Finance shows that 80% of shop owners have financing gaps, and 70% believe that loans can tide them over current situations. Around half the SMBs need 10,000-100,000 yuan in financing, and one third have never had a loan before. It’s not an easy task to ensure that loans are accurately and efficiently matched with the most qualified SMBs. Digital finance can play a big role by tapping data, technology and platform advantages.

 

The PBOC has provided 300 billion yuan of low-cost ad hoc relending funds to major national and provincial banks, to be lent at favorable interest rates to firms producing medical and daily supplies. Prof. Huang suggests that an additional 200 billion yuan should be offered through small and medium banks and Internet banking to support SMBs that have incurred severe losses due to the epidemic. In addition, small and medium banks and internet banking platforms with good risk management should be allowed to create securitized products and reduce loan rates for SMBs.