The China Association of Small and Medium Enterprises (CASME) has launched a 3-billion-yuan ($440 million) venture investment fund to help SMEs raise capital, it said yesterday on its website.
The fund will be established by the end of this year, it said.
Other efforts include the joint issue of an SME corporate bond with the Liaoning provincial government and the founding of a bank with a planned registered capital of 10 billion yuan, CASME said.
"On its establishment, the bank will provide loans only to small- and medium-sized enterprises. Companies can get as much as 5 million yuan each for their investment and development," its head Li Zibin said, without specifying when the bank would open.
Any industrial company with sales revenue of up to 300 million yuan will be eligible for assistance from the fund and the bank, he said.
Difficulties raising capital are a major threat to SME's survival, he said.
According to the National Development and Reform Committee, 67,000 firms with sales income exceeding 5 million yuan closed down in the first half of this year due to the economic slowdown and a tight monetary policy.
Companies were deprived of funds because of shrinking loan supply from banks and rising costs, it said.
SMEs contribute 60 percent to China's GDP, while getting less than 25 percent of total bank loans, Li said.
"It is obviously out of proportion," he said.
However, with demand weakening at home and abroad amid the financial crisis, the country has sought to help its troubled SMEs.
In the second half of the year, the central bank raised loan quotas for national and regional commercial banks by 5 and 10 percent, respectively, to ease the financial pressures on private firms.
Also, during an inspection of firms in Shanghai and Zhejiang province at the weekend, Premier Wen Jiabao said he attached great importance to the challenges they face.
"More supporting policies should be available to create a sound environment for their development," he said.
Source: China Daily/ Xinhua
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