|
Standard Definition
The working capital loan is a RMB or foreign currency
loan the borrower uses for normal business operations or to meet
temporary need for capital.
Overview
Businesses, non-profits, proprietors and other economic
organizations may apply for a working capital loan if they are short
of capital to fund inventories or to meet other operating needs. The applicant must meet the requirements
of the “Loan General Principles” and of the bank, as well as the
following requirements: compliance with industrial policies, foreign
exchange policies and bank credit policies; normal operations, sound
financial policy, and reasonable fund use; capital that meets legal
requirements, and the ability to meet at least 30% of its own working
capital need.
Use
The working capital loan is primarily used to fund
inventories or meet other operating needs. The borrower must not use the loan to fund fixed-asset investments
or for purposes other than normal business operations.
The working capital loan may also be used to fund
acquisition of fixed assets and decoration of office space by securities
firms.
Categories.
1. On the basis of loan terms, there are three categories,
namely temporary loans, short-term loans, and medium-term loans.
（1）Temporary Loans
Temporary loans have terms of under three months (or
of three months), and are used for one-time inventory replenishment
or to help make seasonal payments;
（2）Short-term Loans
Short-term loans have terms between three months to
one year (excluding three months and including one year), and are
primarily used to meet capital needs in normal business operations.
（3）Medium-term Loans
Medium-term loans have terms between one year and
three years (excluding one year and including three years), and
are primarily used as disposable funds in normal business operations.
2. According to guaranty methods, there are three
categories, namely credit loans, third-party guarantor loans, mortgage-backed
loans and pledge-backed loans.
Currencies and Terms
1. Currencies: The working capital loan is available
in both the RMB and foreign currencies.
2. Terms: The term is determined between the debtor
and creditor on the basis of the borrower’s operating cycle and
ability to make payment as well as the creditor’s financial capability. Generally it is under one year; in special
circumstances it may be longer, but must not exceed three years.
Price
Charged according to PBC and CCB loan interest regulations.
Service Providers and Networks
The corporate services departments of CCB branches
market the loan, process applications, make assessments and provide
customer services.
Client Process
1、Application
When the client files a loan application, it must
provide: its operations permit; institutional code certificate;
legal representative identification certificate; loan certificate;
financial statements and auditing reports verified by a treasury
department or a CPA firm for the previous three years and the previous
month (if the business is less than three years old, it must provide
all available financial statements); tax registration certificate;
corporate contract or charter; list of directors, executives, and
financial managers, and a sample of their signatures. If the application is made by an authorized
agent, the original copy of the legal representative’s authorization
letter must be provided; if the client is a limited liability company,
joint-stock company, joint venture or contractor company, documents
that indicate the board of director’s or the contracting organization’s
consent to the application must be provided; documents on the guarantor;
other documents required by CCB.
2、Sign a Contract.
If CCB approves the loan, it will sign a loan agreement
and a guaranty agreement with the client. If the CCP does not approve the loan, it will notify the client
in a timely and definite fashion.
3、Guaranty
After signing the agreement, the borrower must provide
a third-party guarantor, mortgages or pledges. It may need to register the mortgage,
purchase insurance for the mortgaged property, or deposit the pledged
rights with the bank.
4、Loan Disbursement
When the client completes the above procedures, the
loan contract comes into effect.
The bank may disburse the loan to the borrower, who may withdraw
the loan amount for the uses specified in the contract.
5、Repayment
The borrower must repay the loan on time.
|