Financing key to business recovery

Despite the impact of the COVID-19 pandemic, companies at Zhongguancun Science Park in Beijing have maintained sustainable growth thanks to financial support from local authorities.

From January to June, high-tech companies capable of generating annual revenue of more than 20 million yuan ($2.89 million) earned 2.9 trillion yuan in combined business revenue, up 5.9 percent year-on-year, official data showed.

Zhongguancun is home to nearly 30,000 high-tech companies and more than 90 percent of them are small and microbusinesses driven by innovation. Thus, local authorities have made concerted efforts to help them with financing.

Small and medium-sized enterprises are vulnerable to economic fluctuations and need more support for their development, said Fan Rui, an official with the Zhongguancun IP promotion bureau.

Intellectual property-collateralized financing is an effective approach to supporting SMEs' development and stimulating their technological innovation, Fan said.

Under the guidance of the Beijing Intellectual Property Office, the bureau and related authorities have taken multiple measures to help integrate IP and financial resources.

To help companies fight the COVID-19 pandemic, the bureau cooperated with banks and other financial institutions to help companies in Zhongguancun with IP-collateralized financing.

In the first half of this year, the bureau helped seven high-tech companies complete credit extension and renewal projects, with the total credit line exceeding 200 million yuan, officials said.

In 2018, the bureau rolled out a policy to promote IP-collateralized financing for companies. It offers interest rate subsidies and a guarantee for loans, playing an active role in assisting high-tech companies in financial difficulties.

"Companies in Zhongguancun have seen rapid development and their technologies are updated fast," said Li Guangming, deputy head of the bureau.

The amount of patent-collateralized financing in Zhongguancun accounts for more than 90 percent of the total in Beijing, Li said.

High-quality patent-collateralized financing requires valuable patents, proper financial institutions and products, professional service providers and policy support, he added.

Environment Sustainable System Engineering Technology is a Beijing-based high-tech company engaged in the integrated treatment of flue gas.

In 2018, ESSET was designated as a fast-growing gazelle company in Zhongguancun.

Technologies are core assets for the company to manage its environmental protection business, said Wei Jinghua, financial manager at ESSET. In 2017, the company borrowed 15 million yuan from the Bank of Beijing by collateralizing its patents.

This year, ESSET is one of the beneficiaries of the interest rate subsidy policy, Wei said.

"We gained 200,000 yuan in interest rate subsidy, which helps to offset parts of interest from our loans in 2020," she said.

Such a policy provides strong support for companies to have better communication with banks and to get a loan, Wei said.

"It is crucial for SMEs and private enterprises to get over the financial crisis in development," she added.

Li Yi, assistant to the general manager of the technology and finance department at BOB's Zhongguancun branch, said the value of IP assets is varied, resulting in difficulties in evaluation and risk control.

In designing financial products, Li said: "We also put the IP competitiveness of companies as a bonus to determine the credit line for them."

BOB provides IP-collateralized financing services in cooperation with IP evaluation institutions, IP operation platforms and guarantee agencies, Li said.

The policy on providing interest rate subsidies helps companies reduce their costs and is conducive for banks to support more companies, he said.