Loan against mortgaging of steel structure by firms in Shandong

Saturday, 07 Nov 2009

It is reported that Shandong Province carried out a new business of mortgage loan of steel structure assets lately in the whole region and accumulatively offered CNY 4.5 billion of loans to medium size and small companies.

Shandong Hongyu Engineering Equipment Co Ltd a small private rubber type producer in Zaozhuang the first city in China practicing this kind of loan suffered frozen liquidity due to the financial crisis and found its operation in the mire at that moment. However, the company easily won CNY 5 million of loans from ICBC Zaozhuang Branch in March by mortgaging its CNY 15 million worth steel structure plant building, easing off its plight.

In the past years, medium size and small companies only fulfilled indirect financing from banks through pledging their building property and machinery equipments. But the traditional financing ways became powerless and insufficient amid the financial crisis. Under the situation, Zaozhuang started the loan on mortgage of steel structure plant buildings to help small companies out. And the initial estimation of the value of the steel structure plant buildings was over CNY 3 billion in Zaozhuang.

Mr Sui Mingshan chief justice of Zaozhuang said this kind of loan on mortgage is very new in China. After survey, the local count thought steel structure plant building should be regarded as movables, since the buildings, mainly made up of steels and easy to install and remove could be looked as production facilities.

After the approval of local count, PBC Zaozhuang Branch, Small and Medium Enterprise Bureau of Zaozhuang and Zaozhuang Bureau of Commerce and Industry jointly released interim measures of mortgage loan of steel structure assets which laid down the rule that medium size and small companies could apply for less than one year loans from banking institution after their steel structure assets evaluated and registered and the loan should be less than half of the evaluation.

According to the measures, enterprises can advance application of loans first to banks then the two sides entrust an assessment institution to made evaluation then enterprises made registration in Bureau of Commerce and Industry at last, banks fix on the volume of loans and extend the loans.

(Sourced from MySteel.net)
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