The Shanghai city administration has come out with a series of measures this month to facilitate privately owned enterprises.

It will grant at least 10 billion yuan ($1.4 billion) as loans to small and micro enterprises in strategic sectors. Every year, the rediscount amount provided to private enterprises and technology companies should be more than 15 billion yuan.

Rediscount is the act of discounting a short-term negotiable debt instrument for a second time. Sometimes, banks may rediscount short-term debt securities to assist the movement of a market that has a high demand for loans.

Credit and secured loans up to 20 billion yuan will be provided to eligible private enterprises. Starting this year, a sum of 1 billion yuan will be added to a financial fund every year for three years to complement the existing venture capital and angel funds in Shanghai.

This amount will be raised through the city’s financial revenues.

Zheng Yang, director of Shanghai Financial Services Office — the municipal government department in charge of financial supervision and administration, said the city has developed a system comprising commercial banks and other institutions that provide financial services to small and micro enterprises. “Small and micro enterprises should be encouraged to seek direct financing in the capital market,” he said.

Shanghai’s latest measures are in response to China’s central financial regulators’ guidelines released in mid-February, urging financial institutions to provide more support to the private enterprises.

China’s central bank governor said at a financial forum in April that several favorable policies in support of private businesses have made substantial achievements. By the end of April, loans provided to micro and small enterprises surged 20 percent year-on-year to reach 10 trillion yuan, supporting more than 23 million small companies.

By the end of this year, loans provided by national commercial banks to small and micro enterprises should rise 30 percent year-on-year, said Yi.

President Xi Jinping said at a meeting with representatives from private enterprises in November that more financial channels should be explored for them. To that end, private banks, small financial institutions, venture capitalists, and equities and bonds should play a key role.

Shanghai Rural Commercial Bank said in a statement that it will transform up to 400 of its offline branches to specialize in offering financial services to small and medium private enterprises. By 2020, over 80 percent of its client managers would be focusing on private enterprises.

The bank will provide up to 100 billion yuan in loans to private micro and small enterprises in the next three years. It will also nurture 100 technology small and medium enterprises that promise big growth.

Zhao Rong, head of Bank of China’s Shanghai branch, said they have increased their support to private enterprises in the past few years by providing value-added services such as cross-border matchmaking, which means helping small companies to find the right business partners in the overseas markets.

At the end of last year, the branch rolled out a detailed financial product plan to support the development of private companies.

“Private enterprises are an important constituent of China’s economic and social development. They play a key role in stabilizing economic growth, providing job opportunities, and enhancing market vitality,” she said.

Xie Bing, chairman of Argus (Shanghai) Enterprise Group, a manufacturer of textile chemicals, said they have worked with the BOC Shanghai branch for over five years. The granted credit line has increased from the initial 4.5 million yuan to 50 million yuan.

“The bank does not rely on traditional mode of property mortgage. It provides tailor-made credit plans based on the company’s operations,” he said.

At the beginning of June, Bank of Shanghai released a new financing service product to provide small and micro enterprises loans up to a maximum of 3 million yuan. No guarantee fee is required. According to Bei Duoguang, the president of the Chinese Academy of Financial Inclusion, rather than simply granting limited credit to a small enterprise, it is more important to build an ecosystem of inclusive finance within a country’s financial system.