Loans expensive for small Chinese companies

A new report has illustrated how China's small companies are struggling to get affordable access to corporate loans. According to a report on microfinance unveiled at the Boao Forum for Asia, which runs from Tuesday to Friday, 48.9 percent of surveyed small and micro-sized Chinese firms said they found loans more expensive in 2013 than in 2012. Another 34.7 percent of the companies said they experienced no changes in borrowing costs, the report said. Nearly half of the small companies said their borrowing costs were more than 10 percent, much higher than the 6.55-percent official rate for long-term loans set by the central bank. In China, small and micro-sized enterprises account for more than 90 percent of the total number of Chinese companies and provide 80 percent of all jobs. However, they usually have difficulty in securing bank loans, as Chinese banks prefer to lend to larger companies, especially state-owned enterprises, because of relatively low risks.