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Fixed Asset Loans


 

Introduction

Fixed asset loans are issued to address the financing demand of the enterprises' fixed asset investment activities. Enterprises' investment activities in fixed assets include: infrastructure construction, technology transformation, new product development and manufacturing and related activities such as house purchase, engineering project construction, technology and equipment purchase and installation.

Category

Fixed asset loans are divided into long-term loans, short-term working capital loans and foreign exchange on-lending loans with the following purposes:

Capital construction refers to the infrastructure, municipal projects, service  facilities, newly established or expanded  productive projects etc., which are approved by the authorized state departments.

Technology transformation mainly refers to the production expansion project for the existing enterprises.

Technology development refers to the activities about the research and development of the new technology and new product, and the conversion or application of the development achievements to the production field.

Other fixed purchase refers to the direct purchase of places or facilities etc., which are approved by the authorized state departments.

Features

1. Generally the loan amount is relatively large;

2. Generally the term is relatively long, most are long or medium term with installment schedule;

3. On the way of the loan guarantees, except providing the necessary security, generally require taking the new added fixed assets of the project as mortgage;

4. Regarding the application process, the loans should be applied and approved on case by case basis;

5. The differences between the fixed asset loans and working capital loans.

Item Fixed Asset Loans Working Capital Loans
Usage Address the financing demand of the enterprises' fixed assets investment activities Meet the medium- and short-term financing demand of enterprises
Term One to five years of medium-term loans or more than five years of long-term loans Short-term loans less than one year or one to three years of medium-term loans
Auditing Approach Apply and review case by case Apply and review case by case or the credit line of the working capital loan which can be easily borrowed, used and repaid within the term and limit specified by the bank
Source of Repayment The cash flow after project's acceptance of completion or the equity fund of the enterprise Mainly enterprise's business income
Risk Influenced by more external factors, having more  uncertainty and instability in the nature of higher risk Risk is mainly with the borrower, guarantor or mortgage (pledge)
Income Long-term, stable income Short- and medium-term income

Interest Rate

Generally use the floating interest rate, and implemented in accordance with  relevant loan interest rate policies of the People's Bank of China, loan interest rate management regulations of our bank and the agreement of the loan contract.

Charges

All types of charges for fixed asset loans are subject to the contract.

Target Customers

Enterprise and institution legal persons and other economic organizations, which keep independent accounting and whose registrations have been approved by the industry and commerce administration authorities (or the competent authorities).

Application Qualifications

1. The applicant should provide the business license approved annually by the industry and commerce administration authorities, The institutions should provide the legal person certificate;

2. Provide loan license/card issued by the People's Bank of China;

3. Have good economic benefits, good credit status , strong debt paying ability and perfect administration system;

4. Implement loan guarantee acceptable to the bank;

5. Open basic deposit account or general deposit account in Bank of China;

6. The fixed asset loan projects should be in line with national industrial policies and credit policies;

7. The ratio of capital to total investment should be in accordance with the national regulation;

8. Projects should be approved by the relevant government departments, with complete supporting conditions, implementation of  the imported equipment and materials source;

9. For application of foreign exchange fixed asset loans, the applicant should hold the import certificate or registration documents.

Process

1. The borrower submits a loan application to the bank;

2. The borrower submits relevant documents, including business license, articles of association,  financial reports of the past three years, project approval and the approval documents, project economic benefit analysis, usage and repayment plan and so on;

3. The bank conducts survey and evaluation before disbursement, and investigates the borrower's credit rating and legitimacy, security, profitability of the borrower, verifies the conditions of collaterals, pledge, guarantor to form the assessment;

4. After the bank's internal review and approval, and with the consent of both parties on the terms of the loan contract, mortgage contract, guarantee contract, the parties sign such contracts;

5. The borrower handles the mortgage registration and other relevant procedures agreed in the contracts;

6. The borrower submits the withdrawal application;

7. Bank funds are credited into the account, and the borrower withdraws the money.

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