Agricultural enterprises face financing and loan difficulties due to lack of guarantees; funding problems urgently need to be solved
In recent years, bottlenecks have also appeared in the advancement of China's agricultural industrialization, and one notable issue is that many agriculture-related enterprises, on the road to becoming bigger and stronger, have encountered loan difficulties and high loan costs to varying degrees, becoming an unavoidable hurdle for enterprises.
They want to expand production scale but have no funds, and when they go to banks for loans, they either lack collateral or cannot find a guarantor, so in the end they cannot get a loan... Developing the real economy is inseparable from capital. For the vast number of agricultural enterprises, this sense of frustration in gazing at "money" and sighing often leaves them struggling bitterly, urgently needing the government to lend a hand and hoping banks can lower the threshold.
Problems:
"Financing and loan difficulties have become a roadblock for enterprises expanding operations"
Recently, at a symposium on financing and loan guarantees for agricultural enterprises held in Nanchang, Jiangxi, some localities and enterprises discussed the issue of loan guarantees.
A relevant official from the Agricultural Industrialization Office of Shanxi Province said that the current difficulty leading enterprises face in financing is mainly shown in the following aspects:
Enterprises face great pressure on working capital, and financing methods are singular. The capital market sets high thresholds for enterprise financing, only a few enterprises have achieved financing by listing, while financing methods such as bonds and bills are underused.
Bank loan approval takes a long time, and loan terms are short. Most enterprises can only obtain working capital loans, and most repayment periods are only a few months, with the longest less than 1 year, invisibly increasing the burden on enterprises.
Loan costs remain high. Most loan interest rates exceed the benchmark rates published by their head offices. For example, the benchmark rate published by the Agricultural Development Bank of China was 5.75%, while the actual executed rate was 6.6%; the benchmark loan rate published by Jinshang Bank was 6%, while the actual executed rate was as high as 10.68%.
Banks lower collateral ratios in disguised form. To reduce loan risk, some banks require enterprises to add collateral, or directly lower the collateral ratio. The gap between the bank loan and the appraised value of collateral is too large, thus forming collateral several times the loan amount, while only a small loan can be obtained from the bank.
"These problems are basically a true portrayal of the expensive financing and difficult loans our enterprises currently face, and a major crux preventing our enterprises from expanding production and operation scale." Representatives from enterprises such as Jilin Dexiang Wood Industry Co., Ltd. and Anhui Huawei Group Poultry Industry Co., Ltd. all expressed the same feeling to reporters: "Difficult financing and loans for enterprises have become a roadblock to expanding our production and operation scale, let alone driving farmers to prosperity." Current situation:
"Banks have high thresholds, and enterprises repeatedly hit walls" is still the norm
"Enterprises want to expand cattle and sheep breeding scale, and need money; enterprises want to launch a new slaughtering and processing assembly line, and need money; when enterprises purchase raw materials and pay for orders, they need even more working capital... In a word, without money nothing can be done. Without capital circulation, enterprises are often trapped deep in difficulty." said the person in charge of Gansu Kangmei Modern Agriculture and Animal Husbandry Industry Group Co., Ltd. "The only thing we can do is seek loan assistance from banks, but faced with high thresholds, we often go with high hopes and return disappointed. Hitting walls and being blocked has become routine."
Officials from many provinces and regions said that at present, agricultural leading enterprises are finding operations increasingly difficult, especially the situation of loan difficulty, which has only increased. For example, in Heilongjiang, this is mainly seen in rice and soybean processing enterprises; in Guangxi, sugar processing enterprises and in Hainan, fruit processing enterprises also commonly encounter loan difficulties in financing. In Fujian, there are more than 10,000 tea enterprises of various sizes across the province, and severe homogeneous competition makes the financing and loan path for tea enterprises even more arduous, "truly like thousands of troops crossing a single-plank bridge."
"Although in 2013 the Anhui Provincial Financial Office proposed strengthening performance assessment of financial institutions and made clear that financial institutions' agriculture-related loans must achieve the 'two no lower than' requirements, namely that loan increments must be no lower than the level of the same period last year and loan growth must be no lower than the average growth of all types of loans, implementation seems less than satisfactory." said a relevant official from the Agricultural Industrialization Guidance Division of the Anhui Provincial Agricultural Commission. Many agricultural enterprises generally reported that financial institutions develop few suitable loan products and have high access thresholds, and for leading enterprises' loans needed for seasonal purchases of agricultural products, which have controllable risk and relatively high comprehensive returns, loan terms were not extended on the basis of credit lines.
Expectations:
"Hope the government gives a push, and banks lower the threshold"
In order to solve the financing and loan difficulties of agricultural enterprises, various localities have also brainstormed, not waiting or relying on others, but taking the initiative, and have explored and summarized many good methods. Provinces such as Jiangxi and Hebei, with part of the funds injected by government departments and part contributed by leading enterprises, established provincial-level loan guarantee companies to provide services such as guarantees and bridge funds for enterprises seeking bank loans.
Many enterprise representatives said: "There are quite a few support policies, and we hope they can truly be implemented. We hope that in developing the real economy and helping agricultural enterprises do real business, the government can give us a push, and we also look forward to banks and other financial institutions lowering thresholds and providing preferential loan plans suited to agricultural characteristics."
The Tianjin Municipal Agricultural Commission organizes multiple financing training sessions and bank-enterprise matchmaking activities every year, and organizes leading enterprises for negotiation and matchmaking activities. "We organize leading enterprises to participate in matchmaking activities such as Beijing-Tianjin-Hebei science-enterprise matchmaking and the Beijing Agricultural Industrialization Exhibition, precisely so that enterprises can go out and seek capital and partners." said Lin Zhaohui, director of the Industrial Development Division of the Tianjin Municipal Agricultural Commission.
"For issues that enterprises cannot settle through talks with banks, the government should play the role of bridge-builder." said Zhang Shuanyang, deputy director of the Agricultural Industrialization Office of Hebei Province. In building bank-enterprise matchmaking platforms, government departments actively recommend key projects to financial institutions such as China Development Bank, China Minsheng Bank, and Agricultural Bank of China, improve fiscal support methods, give play to the role of the provincial Guofu Agricultural Guarantee Company, establish an agricultural industrialization guiding equity investment fund, plan to establish an agricultural industrialization credit enhancement guarantee fund, and expand new financing channels for leading enterprises.
How should agricultural enterprises cooperate with the capital market? In the view of Yu Xiaoping, director of the Agricultural Industrialization Office of the Heilongjiang Provincial Agricultural Commission, priority should be given to solving issues such as enterprise listing reserves, asset securitization, building a multi-level capital market, and making good use of various new financing channels introduced by the central government, do a good job in surveying listed enterprises, establish a listing reserve pool, guide agricultural enterprises to learn from the business thinking of other industries, "jump out of agriculture to do agriculture, jump out of agricultural thinking to operate agricultural industry, use the capital market to achieve 'from enterprises seeking money to money seeking enterprises,' thereby realizing financing through multiple channels and solving the bottleneck problem troubling the development funds of agricultural enterprises."