Business Entities Enjoy Preferential Interest Rates on Loans and Personal Consumption Loans, Banks Respond Swiftly

Securities Times reporter He Jiao Yuan

Through fiscal subsidies, business entities in the service industry that meet certain conditions can enjoy preferential interest rates on loans and personal consumption loans, with an annual preferential interest rate of 1% - a move aimed at reducing the financial pressure on businesses and stimulating consumer demand. On August 12th, the Implementation Plan for Preferential Interest Rates on Loans to Business Entities in the Service Industry and the Implementation Plan for Fiscal Subsidies on Personal Consumption Loans were officially released.

According to the plan, the central government will provide a preferential interest rate of 1% for business entities that meet certain conditions from March 16th to December 31st, with a maximum cumulative interest subsidy of ¥10,000. From September 1st to August 31st next year, commercial banks such as Industrial and Commercial Bank of China and consumer finance companies like Chongqing Ant Financial will act as intermediaries for personal consumption loans, offering preferential interest rates.

After the release of the two plans, many banks, including Agricultural Bank of China and Postal Savings Bank, quickly announced their implementation plans, stating that they would proceed with the work in accordance with market-oriented and legalized principles.

In recent years, China's consumption structure has shifted from goods-driven to service-driven at a faster pace. The fiscal department official responsible for the plan said, "By introducing targeted support measures, we aim to optimize and expand the supply of services and better match the growing demand for high-quality services among consumers."

Given that the average weighted interest rate for new loans issued by commercial banks from January to June this year was around 3.3%, an annual preferential interest rate of 1% will significantly reduce the debt burden of business entities in the service industry. According to Wang Xiaoyu, director of the Financial Development Research Institute at Nanjing University, the plan is closely tied to the urgency of economic recovery and will accelerate the upgrading of service sector infrastructure.

To be eligible for the preferential interest rate on loans, business entities must meet certain conditions, including that their loans must be used for improving consumer infrastructure and enhancing service capabilities. According to estimates by Yang Chang, chief analyst at Zhong Tai Securities Research Institute, the maximum scale of support could reach ¥182 billion, focusing on industries such as accommodation and catering, healthcare, education, tourism, and sports.

Compared with the plan for business entities in the service industry, the plan for personal consumption loans is slightly delayed and has a longer implementation period. According to a fiscal department official, the interest rate on personal consumption loans will be roughly one-third of the current commercial bank interest rates.

According to Wang Xiaoyu, the delay in implementing the plan for personal consumption loans allows financial institutions time to prepare and implement risk control measures, while also ensuring that the policy benefits cover the peak consumer demand period. Each borrower can enjoy a maximum cumulative interest subsidy of ¥3,000 on all personal consumption loans at one intermediary institution, with a single loan limit of ¥50,000 or below for a maximum cumulative interest subsidy of ¥1,000.

According to the plan, the scope of coverage for personal consumption loans includes single transactions of ¥50,000 or less and focus areas such as home appliances, electronics, healthcare, education, and tourism, which account for a significant proportion of ordinary residents' daily expenses. For transactions above ¥50,000, the interest subsidy will be capped at ¥50,000.

"The core of the personal consumption loan preferential interest rate policy is to reduce the actual financing costs for residents," said Dai Zhixin, a professor at Renmin University of China's School of Finance and Economics. Through differentiated interest rates, the policy will prioritize stimulating demand for major consumer goods such as automobiles, home appliances, education, and healthcare.