Meituan partners with financial institutions to support small business
Staff members sort and pack the ordered groceries at the outlet division of Meituan Maicai in East China's Shanghai, April 12, 2022.
Meituan announced on Wednesday it will partner with a number of financial institutions, including China Everbright Bank, to jointly offer collateral-free loans at fairly low rates to some owners of small restaurants serving local specialty street foods.
The total line of credit will be no less than 10 billion yuan ($1.52 billion), of which Meituan will contribute 30 percent.
The Chinese shopping platform for locally found consumer products and retail services said it will provide information on cash flow and other operating conditions of small restaurants serving local specialty street foods, who will apply for the syndicated loan, to its partner financial institutions in this project.
It is expected that the project will overcome information asymmetry problems, thus helping small businesses find easier access to loans and get through hard times amid the COVID-19 pandemic.
At the initial stage of the project, loans will be provided to store owners of Shaxian Delicacies, a style of cuisine from Shaxian district of Sanming, Fujian province. The store owners who have financing needs can apply for a loan up to 300,000 yuan at an average annualized rate of no more than 7.2 percent. Loan terms vary from three months to three years.
Last year, over 19,000 Shaxian Delicacies stores suspended business due to COVID-19 resurgence while only 6,928 new stores specialized in this type of cuisine opened for business, according to Meituan.
The loans are expected to help small business owners recover from the pandemic and support new urban residents starting a business or getting a job.
The China Banking and Insurance Regulatory Commission defined new urban residents as people who live in a city permanently but have not yet obtained a local hukou, or those who have obtained a local hukou within the past three years. A hukou is an official document certifying that the holder is a legal resident of a particular area. There are more than 300 million such new urban residents in China.
Meituan said it is planning to expand the lending project to other restaurants serving local specialty street foods such as Chongqing Xiaomian, a variety of noodle dishes originating from Chongqing. In addition, it will gradually partner with more financial institutions, apart from China Everbright Bank, in carrying out the project.