E-commerce firm Alibaba.com Corp has joined hands with China Construction Bank to offer loans to individual sellers on its auction site to spur trading and expand its share in China's consumer-to-consumer market.

Vendors on its subsidiary Taobao.com, who often find it hard to gain bank loans, can get up to 100,000 yuan (US$13,698) in short-term loans if they have a good credit history, Alibaba said yesterday.

But applicants will have to pay higher interest rates of 8.21 percent a year for the bank to make a profit margin and to offset the risks. Sellers can apply for the loans when they have closed a deal but not yet received the money.

They must also be users of the Alipay system, which holds buyers' money in trust and won't send it to the sellers' bank accounts until buyers confirm they have received the goods and are satisfied with the quality.

About 40,000 to 50,000 sellers on Taobao are qualified for the program, judging by their business scale and credibility, according to Alipay.com, Alibaba's online payment subsidiary and the program operator.

"It's a good idea for us to develop small-loan business and meet the demand, especially in the booming e-commerce area," said CCB in a joint statement with Alipay.

The loan size cannot exceed the value of the deal, and the bank will recover the loan and interest directly through Alipay once the payment goes through.

The 8.21-percent interest rate compares to the basic six-month lending rate of 6.57 percent set by the central bank.

Shao Xiaofeng, Alipay's president, said it won't make a profit from the service, as the aim is just to "develop the size of China's Internet businessmen with a value-added service."

Most sellers on Taobao, China's most popular C2C platform, are self-employed and more than 80 percent of their investment comes from their personal income, according to Alipay.

(Shanghai Daily January 22, 2008)