(Yicai Global) Nov. 15 -- Micro and small Chinese companies, which have been particularly hard hit by the fallout from the Covid-19 pandemic, will be allowed to postpone the repayment of the principal and interest of loans due in the fourth quarter to give them more time to recover, the country’s financial regulators said yesterday.

Small companies have until June 30 next year to repay loans due this quarter, the People’s Bank of China and four other government agencies said in the fifth such deferral since the pandemic broke out in March 2020. Interest will still accrue but there will be no penalties. Banks should also not give them a bad credit history so long as they repay before the new deadline.

Many small businesses are running into difficulties in the fourth quarter due to the ongoing outbreaks of Covid-19, said Wang Qing, chief macro analyst at Golden Credit Rating International. The new policy will ease pressure on these firms so as to stabilize employment and achieve economic growth.

Given that a number of micro, small and medium-sized enterprises are still in trouble, the government needs to make greater efforts to bail them out, said Dong Ximiao, chief researcher of CMB-China Unicom Consumption Finance.

Repayments of CNY5.1 trillion (USD725.1 million) worth of outstanding loans were rolled over for 2.1 million individually run, micro, small and medium-sized businesses in the first nine months, an insider at the China Banking and Insurance Regulatory Commission told Yicai Global earlier.

And loans to micro and small companies are expected to jump 25 percent by the end of this year from a year ago, up from the 24.6 percent growth at the end of the third quarter, Wang said. This is now the fourth straight year that growth has stayed above 20 percent.

All levels of financial regulators need to treat non-performing loans by small firms differently, the document said. They should take the latest deferral of loan repayments into full consideration when doing their annual assessments and adjust their business performance accordingly.

Editors: Tang Shihua, Kim Taylor