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China's laid-off workers will be able to apply for small guaranteed loans to start their own businesses, according to a regulation jointly released by the People's Bank of China, the Ministry of Finance, the State Economic and Trade Commission, and Ministry of Labor and Social Security in Beijing Friday.
According to the regulation, laid-off workers under the age of 60 can apply to commercial banks for loans of up to 20,000 yuan (US$2,418) to cover part of the expense of starting their own businesses provided the loans are properly guaranteed.
Interest rates will be the same as those announced by the People's Bank of China and should not be increased.
The loans can be increased when laid-off workers apply collectively.
Repayment and interest-collecting methods will be jointly decided by loan applicants and issuing banks.
The time limit of the loans is less than two years and can only be extended once for less than one year on the condition the warrantor agrees to extend it accordingly.
Special funds should be established to finance the loans at provincial, municipal and city level and commercial banks designated by fiscal departments are responsible for the management of the loans.
The loan program at city level will be halted if 20 percent of the loans are non-performing, but can be resumed when bad debts are reduced to below the required level.
(Xinhua News Agency January 11, 2003)
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