(Yicai Global) June 24 -- Several departments of the Shanghai government are lending their support to local banks to provide guarantee-free, low-interest loans to micro, small and medium-sized companies in the city that have been badly affected by the recent Covid-19 outbreaks to help them through the hard times.

The Shanghai Municipal Policy Financing Guarantee Fund Management Center for Micro, Small and Medium-Sized Enterprises, district-level government finance bureaus and commercial banks are joining forces to provide eligible firms with low financing costs and high approval rates, Yicai Global has learned.

The bailout targets companies that are experiencing a liquidity crisis but still have good market prospects, a respectable credit history and a stable number of employees. A micro or small business can apply for a maximum of CNY10 million (USD1.5 million) in credit, while loans for medium-sized companies can go up to CNY50 million, according to the local government. Interest rates should be no higher than the usual average interest rate for such enterprises.

The Management Center will guarantee the loans while the district financial bureaus where the firm is located will subsidize the interest payments and provide a certain amount of risk compensation to banks. District governments will also grant additional fee cuts to businesses, taking into account the fallout from the novel coronavirus flare-ups this year.

Editors: Tang Shihua, Kim Taylor