Alibaba-backed online lender Mybank announced on Tuesday a five-year plan to expand its loan services to more small and micro enterprises.
Why it matters: Micro and small businesses—among the hardest hit during the Covid-19 lockdown—play a central role in China’s economy.
- Small and micro enterprises account for over 90% of business entities in China, and contribute 80% of national employment and 60% of China’s GDP, according to data from the People’s Bank of China.
- Likewise, tech giants including Tencent, Meituan, Pinduoduo, and JD are also ramping up their efforts to support micro and small enterprises by offering low-interest or interest-free loans.
Details: Mybank, an online private commercial bank under Alibaba’s fintech affiliate Ant Group, said in a statement that it plans to support 10 million micro and small enterprises over the next five years. It will leverage supply chain finance and expand rural lending efforts as part of the plan.
- Under the plan, the Zhejiang-based bank is offering interest-free vouchers for business loans totaling RMB 300 billion ($42.4 billion). It will cooperate with 2,000 county and village managers to provide loans in rural areas.
- Through partnership with China’s three policy lenders—China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China—Mybank has sent three batches of one-month interest-free vouchers in the past month, a company spokesperson told TechNode. Businesses that receive a voucher don’t have to pay interest for the month.
- RBM 30 billion worth of interest-free vouchers will be distributed before the end of this year, the company said.
- Special attention has been given to women entrepreneurs with a pledge to serve 40 million female business owners with the aim to provide more economic opportunities.
- Mybank and its partners have served 29 million (in Chinese) small and micro enterprises in China as of June 2020, including street vendors, Simon Hu, CEO of Ant Group and chairman of Mybank, said at the Mybank Microfinance Partner Conference on Tuesday.
- The average loan is RMB 36,000 and 80% of the companies had never previously received business loans from a bank.
- Micro and small businesses in China have shown resilience during the Covid-19 pandemic, with 98% of them repaying their loans on time, according to Hu.
Context: Established in June, 2015, Mybank, officially known as Zhejiang E-Commerce Bank Co. Ltd., is an internet-only lender majority-owned by Alibaba.
- China’s online banks, led by Alibaba’s Mybank and Tencent’s Webank, are seeing rapid growth thanks to wide application of new technologies and the popularity of mobile payments in the country.
Correction: an earlier version of the story referred to Ant Group by an earlier name, Ant Financial.