In recent days, the government has rolled out reforms to the registered capital registration system, offering new opportunities for private entrepreneurs and small and micro enterprises to thrive. Experts predict a significant surge in the number of such businesses, which will drive up the demand for microfinance services. As a result, microfinance has become a crucial area for banks, prompting increased innovation in both products and services tailored to meet the unique needs of small enterprises.
Small and micro enterprises play a vital role in driving economic growth, fostering social progress, and creating employment. According to data from the Ministry of Industry and Information Technology, these enterprises account for over 99% of all businesses in China, contributing approximately 65% of the country’s GDP. They also provide around 85% of urban jobs and contribute roughly 60% of total tax revenue.
Despite their importance, many small business owners still rely heavily on banks for financing. Surveys show that 66.7% prefer banks as their primary source of external funding. However, challenges remain—45.8% of them report difficulties such as long loan processing times, insufficient collateral, weak financial statements, and high borrowing costs. In response, experts have urged commercial banks to act as a "new force" in supporting small and micro enterprises.
To better serve this growing market, many banks have begun rethinking their strategies. For instance, CITIC Bank introduced a 48-hour loan process, streamlining application procedures and enhancing efficiency. The bank also implemented standardized review forms and focused on risk control points to improve decision-making speed. Post-loan management was also refined, with differentiated approaches based on customer repayment patterns and business conditions.
According to a senior official at CITIC Bank’s Small Business Finance Department, the bank has been shifting from traditional mortgage products to credit-based solutions, improving customer experience and accelerating the loan process. This shift reflects a broader industry trend toward innovation in microfinance.
Wang Zhongming, deputy secretary general of the National Federation of Industry and Commerce, emphasized that microfinance is essential for China's economic transformation. He called for more high-quality microloan products to help alleviate the financing challenges faced by small businesses.
Data from CITIC Bank shows promising results. By the end of September 2013, the balance of small and micro-enterprise loans reached 354.18 billion yuan, rising by 31.28% year-on-year. This growth outpaced the average loan growth rate by 18.05 percentage points. Through its comprehensive platform—including banking, securities, and trust services—CITIC has helped over 100 small firms enter the market via credit financing and equity offerings. It has also expanded financing channels through instruments like bill collection and mezzanine financing, reducing corporate financial burdens.
Regulatory support for small and micro enterprise finance has never been stronger. In March, the China Banking Regulatory Commission issued guidelines encouraging banks to increase credit support and broaden financing options. This marked the 16th policy document on the subject. In August, the government released further guidance to accelerate financial innovation for small businesses.
As interest rates liberalize and financial disintermediation gains momentum, banks are seeking new profit drivers. Regulatory bodies are pushing major banks to enhance their microfinance capabilities, while many institutions are proactively innovating to capture the vast potential of this market.
With more banks focusing on small and micro enterprises, microfinance has become a central part of their strategy. This shift has not only boosted market recognition but also positioned small and micro financial services as key players in the banking sector.
In 2012, CITIC Bank President Zhu Xiaohuang expressed his commitment to microfinance, aiming to build a “smart bank†with a retail-focused model. By 2013, the bank had restructured its operations, placing small and microfinance under the retail division and establishing specialized branches across the country.
CITIC also launched four new product lines, including the “Xinjie Loan†series for small business owners, the “Seed Loan†for those backed by third-party funds, the “Business Loan†for merchants, and the “POS Loan†based on credit card transactions.
These innovations demonstrate the growing importance of microfinance in supporting small businesses during challenging economic times. As of July 2013, China’s small and micro enterprise loan balance reached 16.5 trillion yuan, accounting for 22.5% of total loans. The number of such loans rose by 14% year-on-year, showing strong momentum.
Looking ahead, the development of small and micro enterprises is expected to be a major trend in China’s banking sector. Microfinance will continue to serve as a key driver of growth and innovation, shaping the future of financial services for millions of small businesses.
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