The Guangdong government introduced a blockchain-based financing platform on January 2 that will help small organizations in the district get loans quicker from commercial banks.
The government-led initiative is upheld by OneConnect, a fintech company sponsored by one of the biggest Chinese insurers, Ping An Insurance, as per a media report from Sina Finance.
The platform intends to streamline the procedure for commercial banks to loan funds to small business with more detailed and solid profiles, including credit ratings, given by its blockchain network.
The new platform could be the outcome of a government project introduced in July to develop a blockchain financing platform to link with nearby Hong Kong and Macao to enable small enterprises to get loans faster and easier, as indicated by the report.
One of the platform’s clients is Ant Financial, which revealed in November intentions to test its blockchain network, Ant Blockchain Open Alliance, to help new companies, while OneConnect filed a $468 million initial public offering in the U.S. during the same time.
The new platform makes credit ratings for small and medium businesses dependent on their financial and administrative data by means of a blockchain network of 26 government offices like the State Administration for Industry and Commerce.
“Borrowing money from commercial banks for small companies has been slow and expensive,” Guangdong Local Financial Regulatory Bureau director Xiaojun He stated in the report.
With the platform, small businesses will have the option to utilize their intellectual property and export-import trading records to apply for loans from commercial banks, which is unthinkable under the norm, as indicated by the report. It can likewise match organizations with 319 financial products based upon their financial situations.
As indicated by the report, the platform has gathered data from over 11 million organizations, along with 129 financial institutions. It has handled three transactions between local technology startups and commercial banks, including the China Construction Bank, Industrial Commerce Bank of China, and Ping A Bank.