Chapter I General Provisions
Article I These Rules have been created to encourage the municipality's guarantee institutions to provide greater support to small and micro enterprises and deal with their financing difficulties more effectively.
Article II The term "small and micro enterprises" as mentioned in these Rules refers to small- and micro-sized enterprises (including self-employed businesses) registered in Beijing in accordance with national classification standards.
Article III The term "guarantee" as mentioned in these Rules means the legal act of the guarantee institutions to provide credit support for the financing of small and micro enterprises in the city. The guarantee and re-guarantee institutions mentioned in these Rules refer to the professional guarantee and re-guarantee institutions incorporated in Beijing and authorized by the regulatory authority to finance guarantee operations.
Article IV Compensation funds for credit guarantee for small and micro enterprises in Beijing (hereinafter referred to as the "Compensation Funds") shall be financed by the municipal fiscal budget. Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology shall be responsible for guiding and supervising the compensation funds and empowering the compensation fund trustees (hereinafter referred to as the "Trustee") to manage and operate the compensation fund account.
Chapter II Source of Fund and Scope of Support
Article V The source of the compensation funds shall be the municipal fiscal budget, compensation fund operating income, and the recovery of guaranteed compensation items.
Article VI The purpose of the fund: when the guarantee institution is engaged in policy affairs such as loan guarantee for small and micro enterprises, the compensation funds shall provide partial compensation for the guarantee institution and partial re-compensation for the re-guarantee institution if the project requires compensation.
Article VII The guarantee agency applying for the compensation funds shall be required to meet all of the following conditions:
(I) Legally incorporated as a financial guarantee institution and operating in compliance with relevant regulations.
(II) Holding a valid business license for a financing guarantee institution.
(III) Having a valid credit rating report issued by a credit intermediary qualified for rating a guarantee institution or qualified for rating the capital market, as recognized by the Business Administration Department of the People's Bank of China.
(IV) Having a sound internal business management system in place and a complete and effective mechanism for pre-review, in-process supervision and ex-post recovery and treatment of the guarantee project.
Article VIII Small and micro enterprises eligible for such support under these Rules must meet all of the following conditions:
(I) Independent enterprise or self-employed business legally registered in Beijing Municipality and operating in good standing.
(II) Being aligned to national and municipal industrial policies and the positioning of the city as the capital, not belonging to an obsolete, backward industry.
(III) Employing loan funds for normal production and operation, instead of stock investment or real estate development.
(IV) Having no demerit record for legal or regulatory violations over the last two years on the part of the enterprise itself or its controller.
Article IX The guarantee institution and re-guarantee institution eligible for support under these Rules shall enter into a cooperation agreement with the trustee. The guarantee institution and re-guarantee institution shall provide for full quarterly disclosure to the trustee concerning changes to the company's governance structure, financial and accounting statements (annual audit reports), details of financial accounts, details of insured businesses, risk classification of guaranteed items, and recovery of compensated items and accept scheduled/unscheduled inspections by the trustee.
Article X The loan guarantee business supported by these Rules shall meet the following conditions:
(I) The loan guarantee amount of a single guarantee institution shall not exceed CNY 10 million for the loan guarantee business of small and micro enterprises supported by these Rules.
(II) The annualized comprehensive guarantee premium rate (including guarantee premium, review fee, etc.) for new small and micro enterprises of the guarantee institution shall be limited to 2% at maximum for the current year. For requirements otherwise specified during the epidemic, the specifications shall prevail.
(III) A maximal increase of 50% is allowed for the guarantee interest rate of the small and micro enterprise loan provided by the bank on the basis of LPR for the same period.
(IV) The guarantee institution shall conclude the Re-guarantee Contract with the re-guarantee institution.
Article XI The compensation funds shall provide compensation for the policy guarantee business of the guarantee institution. If the guaranteed amount accounts for 80%, 60%, 50% or 40% of the total of new financing guarantee business in that year in Beijing, the compensation funds would cover 30%, 25%, 20% or 15%, respectively, of the liabilities actually undertaken by the guarantee institution, to the extent that the total compensation shall not exceed 20%, 15%, 12.5% or 10% of the actual amount of compensation.
The compensation funds shall provide re-compensation to the re-guarantee institution, in a maximum proportion of not more than 25% of the liability actually assumed by the re-guarantee institution, with the total amount of compensation not more than 5% of the total amount of compensation actually incurred.
Article XII After financial (including re-guarantee) compensation at the municipal and district levels, the guarantee institution shall bear at least 30% of the amount of compensation actually incurred.
Chapter III Management Organization
Article XIII Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology shall supervise and manage the compensation funds.
(I) They shall determine the scale of compensation funds, trustees, and entrustment periods among others.
(II) They shall review the compensation plan.
(III) They shall jointly review, write off bad debt, and make changes to the scale of funds.
(IV) They shall review the trustee work report on the management and use of the compensation funds.
(V) They shall supervise and inspect the use of the compensation funds.
Article XIV Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology shall entrust the trustee with the following responsibilities:
(I) Managing and operating the compensation fund account.
(II) Selecting guarantee institutions, re-guarantee institutions and banks, concluding cooperation agreements and submitting them for filing.
(III) Accepting and conducting preliminary review of the project applying for compensation.
(IV) Conducting preliminary review of compensation applications submitted by guarantee and re-guarantee institutions, and issuing review reports.
(V) Urging the guarantee institution to carry out daily tracking management and financial risk control of the loan enterprise, inspecting the implementation of the loan contract and the credit status, and requiring the enterprise to rectify any problems that may arise in a timely manner.
(VI) Preparing the compensation plan and issuing compensation funds upon approval by Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology.
(VII) Providing Beijing Municipal Bureau of Economy and Information Technology and Beijing Municipal Finance Bureau with changes to the special account for the compensation funds, information on compensation cooperation agencies, and filing of projects declared for the first half of the year; the use of the compensation funds for the previous year and the work plan for the current year at the beginning of each year.
(VIII) Other tasks assigned by Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology.
Chapter IV Working Procedures
Article XV Project filing: New small and micro enterprise loan guarantee projects that meet the conditions specified in these Rules shall be filed to the trustee before the 20th day of each month; the trustee shall complete the preliminary review of the project by the end of each month and file with Beijing Municipal Bureau of Economy and Information Technology through the compensation fund management system.
Article XVI Project compensation declaration: Guarantee institutions and re-guarantee institutions may apply to the trustee for compensation every six months.
Article XVII Review of project compensation: After receiving the declaration materials from the guarantee institution and the re-guarantee institution, the trustee shall conduct a preliminary review of the declaration materials and propose a compensation scheme to Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology. Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology shall entrust the review to a third-party reviewer. The review fee shall be arranged by Beijing Municipal Finance Bureau.
Article XVIII Confirmation of project compensation: Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology shall issue the review comments on the basis of the review results obtained from the third-party reviewer. In accordance with the review comments received from Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology on the compensation scheme, the trustee shall issue the project confirmation documents to the guarantee institution and re-guarantee institution and allocate the compensation funds.
Article XIX Project recovery: The guarantee institution shall implement effective recovery. The recovery payment shall be returned to the special account for compensation funds in the compensational proportion after deducting the costs for realizing creditor's rights such as litigation. Each time the guarantee institution declares compensation to the trustee, it shall explain in writing the recovery of the compensated items.
Article XX Project write-off: The net loss of the compensation resulting from borrower bankruptcy or litigation against the borrower with ruling issued shall be written off after being confirmed by the cooperative guarantee institution, reviewed by the trustee, and confirmed by Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology.
Article XXI Regular inspection: The guarantee institution and re-guarantee institution shall disclose quarterly changes to the company's governance structure, financial and accounting statements (annual audit reports), details of financial accounts, details of insured businesses, risk classification of guaranteed items, and recovery of compensated items, and accept scheduled/unscheduled inspections by the trustee.
Article XXII Priority compensation shall be shown to payments from the operation income of compensation funds and recovery payments.
Article XXIII Exemption of liability: In case that the re-guarantee institution is exempted from re-guarantee liability due to a breach of the re-guarantee contract signed with the re-guarantee institution, the loss shall not be covered by the compensation fund.
Article XXIV Systematic filing: The trustee shall log in to the special fund management system for SME development (http://fzzxzj.miit.gov.cn) in a timely manner, and fill in and report the filing, compensation and recovery of the project according to the instructions for use.
Chapter V Capital Management
Article XXV The trustee shall manage the special compensation fund account and make use of it in strict accordance with the specified scope and the direction approved by Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology to ensure safe operation, and shall accept the supervision of Beijing Municipal Finance Bureau.
Article XXVI If during the course of loan guarantee management, the guarantee institution shall be found to be fraudulent, or the enterprise is found to be unable to repay the loan in due order; in case that the bank and guarantee institution fail to cooperate in handling overdue loan guarantee, the re-guarantee institution may revoke re-guarantee obligations, consequently the liabilities for the compensation fund.
Article XXVII The trustee shall urge the guarantee institution to recover the principal and interest of the loan in case that the enterprise is unable to repay in time as a result of operational difficulties. After deducting cost arising as a result of realizing creditor's rights such as litigation, the recoverable income shall be returned to the special account for compensation funds in the prescribed amount in time.
Article XXVIII On the premise of ensuring the safety of funds, the trustee shall, upon receiving approval from Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology, carry out a value-added operation on the idle amount of the special account of compensation funds, taking into account the liquidity of funds and the reasonable level of return. Nevertheless, it shall not be used for high-risk investments such as stocks, futures and real estate, or spent on donation or sponsorship.
Article XXIX From the date of appropriation of the compensation funds, the trustee may withdraw the entrustment management fee for the compensation funds on an annual basis. The fund entrustment management fee is withdrawn at a rate not exceeding 0.5% of the principal balance and the value-added income of the compensation funds. The entrustment management fee shall be used mainly for expenditures related to the operation and management of the compensation funds.
Article XXX The operation income of the compensation funds and recovery funds shall be deposited into the special compensation fund account in a timely manner.
Article XXXI The trustee shall submit the audit report on the management and use of compensation funds for the previous year before the end of March each year, and the work report for the operation and management of the compensation funds for the previous year. The report shall include the compensation fund supported project, recovery and loss, fund operation and management characteristics and innovation, etc.
Article XXXII Beijing Municipal Finance Bureau, together with Beijing Municipal Bureau of Economy and Information Technology, shall supervise and inspect the use of the compensation funds in a scheduled and unscheduled manner, and may entrust audit or evaluation to social intermediary institutions if necessary.
Article XXXIII A fiscal supplementation mechanism shall be established for the compensation fund to ensure the sustainability of the compensation funds.
Chapter VI Supplementary Provisions
Article XXXIV These Rules shall be interpreted by Beijing Municipal Finance Bureau and Beijing Municipal Bureau of Economy and Information Technology.
Article XXXV These Rules shall be put into trial implementation for 2 years starting from the date of issuance. Eligible guarantee projects before the date of issuance of these Rules shall be implemented in accordance with Implementation Rules of Beijing Municipality for Management of Compensation Fund for Credit Guarantee for Small and Micro Enterprises (Jing Cai Jing Yi [2016] No. 1592), and the documents shall be annulled after conclusion of such projects.