Shanghai banks support restaurants as dine-in services resume

Dine-in services have resumed in east China's Shanghai after a three-month suspension as the city loosened its COVID-19 restrictions on June 29, and local banks too are now extending new loans to such businesses during this important time.

One of the companies looking to get new loans is Shuhai Supply Chain Solutions, which helps match restaurants with suppliers.

Wang Jingbo, head of Shuhai's innovation center in Shanghai, said though business was suspended at the city's restaurants during the closed-off management period, liquidity was in high demand among food suppliers struggling to meet the needs of 25 million residents kept indoors.

During Shanghai's closed-off management in April and May, the company applied for loans worth 200 million yuan ($30 million) from the Bank of Shanghai for over 30 food suppliers it works with.

But the target now is the restaurants. 

"Restaurants are counting on daily earnings to pay their staff, rents and supplies. But the closed-off management brought them zero earnings or very little, which created a huge problem. They need more financing support as business resumes," said Wang.

Government officials have also taken notice of the difficulties faced by restaurants and other related dining businesses.

In the end of June, Shanghai's Banking and Insurance Regulatory Commission launched a supporting mechanism to help small- and medium-sized enterprises (SMEs), giving specific plans for banks to help SMEs.

In Shanghai, there are over 100,000 restaurants, according to the Shanghai Restaurants and Cuisine Association. Their businesses were all affected by the COVID-19 outbreak over the past months. Thus, the dining business is among the sectors that the mechanism pointed out as a major target of support.

Following such mechanism, Bank of Shanghai, for example, has decided to expand loans to SMEs.

"For the first time, medium-sized companies can apply for new loans without having repaid previous loans. This was a service that we only offered before to smaller-sized companies," said Zheng Han, deputy general manager of small enterprises financial service at the Bank of Shanghai.

In addition to the dining sector, other major industries that the mechanism points out include retail, logistics and manufacturing.

Lending by Shanghai's major banks to SMEs jumped by 30 percent from a year ago in the first quarter of 2022 to 640 billion yuan (about $96 billion). As Shanghai's 500,000 million SMEs reboot their stalled businesses, that figure is expected to rise further in the coming months.

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