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Alibaba gets 7 banks to raise loan limit for its B2B vendors to 10 million yuan
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ALIBABA joined hands with seven domestic commercial banks to launch an updated credit loan with the highest line of credit set at 10 million yuan (US$1.6 million), up from the previous limit of 1 million yuan when the first credit loan product was launched in 2011.
Based on the transaction records of corporate vendors on Alibaba's B2B site, commercial banks can gain access to the business situation and credit history of small and medium-sized vendors.
The first batch of banks to provide small loans to Alibaba's online vendors are Bank of China, China Merchants Bank, Pingan Bank, China Construc
tion Bank, China Industrial Bank, Bank of Shanghai and Postal Savings Bank of China.
Vendors that have secured export orders through onetouch.alibaba.com, a special section for B2B export vendors on Alibaba, will gain a credit line for each order. For every one US dollar worth of order, they can receive 1 yuan of loan.
No mortgage is required and the average monthly lending rate is around 1 percent.
The huge amount of transaction data compiled at Alibaba's B2B platform allows commercial banks to have a fair view of the vendor's actual business operation status, lowering the lending risk.
"Moreover, each order buyers placed on Alibaba's platform is traceable and easier for a third party to access the lending risk," said general manager Wei Qiang at the comprehensive service department of Alibaba's foreign trade unit.
"The partnership with Alibaba allows us to offer tailor-made service for our clients to provide better financing service for them, and it's a key step for financial institutions to boost support for cash-tight exporters," said Tang Zhihong, deputy president of China Merchants Bank.
Alibaba has been stepping up efforts to encourage vendors to sell their products through its platform to boost its transactions and raise awareness among overseas businesses ahead of its highly anticipated initial public offering in the United States later this year.
Wu Minzhi, general manager of Alibaba's B2B unit, said the company hopes to leverage the online transaction data to help cash-tight small vendors and to combine financial capabilities of external partners to lower the credit rating cost for the lending parties.
By the end of June this year, Alibaba had extended more than 210 billion yuan of loans to 800,000 small and micro businesses.
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