China boosts funding for small tech firms – News Today

Beijing, July 27: China has announced a major boost to support for small and medium-sized technology enterprises (SMEs) by strengthening the National Financing Guarantee Fund. The finance ministry said on Friday that the fund’s risk-sharing ratio will increase from 20% to a maximum of 40%, providing greater security to lenders and easing financing challenges for innovative technology firms.

The move is part of China’s broader strategy to achieve technological self-sufficiency and drive innovation in key industries. By raising the guarantee ratio, the fund will now cover up to 40% of a loan’s value in the event of a default, offering a stronger safety net for financial institutions and encouraging them to lend more to smaller technology companies.

The National Financing Guarantee Fund, set up in 2018 with an initial capital of 66.1 billion yuan ($9.12 billion), aims to support SMEs, agricultural ventures and innovative enterprises. The expanded coverage is expected to ease the financial difficulties faced by technology SMEs, which often struggle with insufficient collateral and stringent lending criteria.

The Ministry of Finance statement stressed that the increased support will allow banks to increase financing for technology start-ups, obtain additional financial resources for technological development and support activities aimed at a high level of technological independence.

The policy adjustment reflects Beijing’s continued commitment to promoting innovation and addressing the financial barriers faced by smaller tech firms. The expanded fund is expected to play a key role in facilitating the growth of the tech sector and promoting China’s ambitions for technological independence.