8. Will the Database be updated regularly?
Yes. The Database will be updated monthly for the following actions:
• Addition of new eligible enterprises. Eligible enterprises can request to be added to the Database upon bank recommendation or application filing.
• Removal of eligibility. Enterprises will be removed from the Database if they can no longer fulfill the requirements due to practical reasons after a veto proposal has been made by related authorities, banking institutions, or town/subdistrict governments, and a joint verification has been conducted by BOFTEC and BOEC.
9. What incentives are automatically given to the designated enterprises once they are listed in the Database?
Once the enterprises are listed in the database, they can receive an interest subsidy for newly increased credit from banks in Dongguan. This option was made available on Oct. 1, 2008 and will continue until Dec. 31, 2009. This is an increased amount loan balance compared to Sep. 30, 2008. The maximum term of interest subsidy is 1 year.
10. What are the criteria for granting an interest subsidy?
An interest subsidy is granted to each enterprise for a maximum period up to 1 year at a 2% interest subsidy rate up to 500,000 yuan.
The interest subsidy will not be offered in any of the following situations:
• The loan term exceeds 1 year (including the extension)
• Loans are proved to not being used according to the loan contract
• Principal and interest fail to be repaid on time
• The enterprise and its shareholders have a bad credit record
• The project has obtained another special interest subsidy within the same year
11. How is the interest subsidy implemented?
An enterprise can receive an interest subsidy by only after full payment of its scheduled interest payment. The enterprise must first pay full interest to the bank, monthly or quarterly, and then subsidized interest is returned to the enterprise’s bank account before the 15th day of the forthcoming quarter.
12. Do I have to apply for an interest subsidy by submitting supporting documents to government departments?
No. The grant of interest subsidy is offered through internal procedures after coordination between government departments and banks, and the interest subsidy for the previous quarter will be granted to the enterprise’s bank account before the 15th day of the forthcoming quarter.
13. What are the obligations of enterprises on the Database?
In accordance with the regulations adopted by BOFTEC, BOET and The People’s Bank of China, the enterprises in the Database should fulfill the following obligations:
• Provide information including company profile, information on financial status and production operations for regular Database updates
• Establish a modern corporate system
• Improve operation and financial management of the enterprise
• Operate in accordance with the law
In circumstances of credit failure, penalties may be as follows:
• In case of minor credit failure, the name of the enterprise will be added to a monitory list, which may result in loan suspension from banks.
• In case of serious credit failure, the enterprise will be removed from the Database and put on a black list with its bank account frozen.
• If credit failure constitutes a criminal offense, the enterprise will be subject to judicial procedures.
14. How is the direct loan support granted under FPSP?
Direct loan support is given to banks that have signed a cooperation contract with the government of Dongguan. For new increased loans issued by banks directly to enterprises and not guaranteed under guarantee institutions after Oct. 1, 2008, the amount of 2% of the newly increased loan is allocated as credit risk compensation from the city budget to the banks. If any loss is incurred for banks concerning loan granting, 50% of the principal loss may be claimed back from the risk compensation fund of the city budget. If the principal loss exceeds 2% of newly increased loan, risk compensation will not be offered. The credit risk compensation fund is assumed in the rate of 80% by the city government and 20% by the town/subdistrict government.
15. How is credit guarantee support carried out under FPSP?
Credit guarantee support is given to guarantee institutions that have signed a cooperation contract with the government of Dongguan. For a new credit guarantee issued by guarantee institutions to enterprises after Oct. 1, 2008, the same amount of 3.3 % of newly increased guarantee is offered as guarantee risk compensation. If any loss incurred for guarantee institutions concerning the granting of credit guarantee, 50% of the principal loss can be claimed back from the guarantee risk fund allocated by the city budget. If the principal loss exceeds 3.3% of a newly increased credit guarantee, the government does not offer guarantee risk compensation. The guarantee risk compensation fund is assumed in the rate of 80% by the city government and 20% by the town/subdistrict government. In order to alleviate an enterprise’s burden, the government requests that the guarantee rate charged to enterprises should be lower than national standard, or no higher than 2.5%.