Original Title: Notice from the Department of Science and Technology of Shandong Province and the Department of Finance of Shandong Province on Issuing the "Operational Guidelines for Risk Compensation for Loans for the Commercialization of Scientific and Technological Achievements in Shandong Province"
Loans for the commercialization of scientific and technological achievements are loans provided by commercial banks to enterprises for the purposes of scientific and technological research and development, the commercialization of achievements, or industrialization. Such loans are subject to filing management, and those meeting the filing criteria are included in the scope of risk compensation.

I. Filing of Loans for the Commercialization of Scientific and Technological Achievements

(1) Applicant Eligibility and Requirements

The applicant for the filing of loans for the transformation of scientific and technological achievements shall be the commercial bank issuing such loans, and must meet the following conditions:

1. The borrowing enterprise must be registered within the administrative region of Shandong Province (excluding Qingdao City) and must have obtained a registration number in the National Database of Science and Technology-Based Small and Medium-Sized Enterprises during the loan year. The annual balance of loans for the commercialization of scientific and technological achievements eligible for risk compensation for a single enterprise shall not exceed 10 million yuan.

2. The lending bank must be in sound financial condition, possess sufficient credit-granting capacity, and have the ability to bear corresponding risks; among the technology achievement transformation loans that have been filed, the proportion of unsecured credit loans (without collateral or guarantees) must be no less than 50%.

3. The loan term shall not exceed 3 years (including 3 years), the interest rate shall not exceed the Loan Prime Rate (LPR) for the corresponding period published by the People’s Bank of China plus 200 basis points (1 basis point equals 0.01%), and the loan must be disbursed within 3 months.

4. Loans that have already been filed may be eligible for re-filing if they are renewed through principal-free rollovers, emergency bridging loans, or if principal and interest repayment is deferred in accordance with relevant regulations.

(II) Filing Process

1. Filing Application

The Municipal Science and Technology Bureau where the borrowing enterprise is registered is responsible for accepting and reviewing filing applications, with specific procedures following the filing requirements of each municipality. Filing materials include: the “Shandong Province Science and Technology Achievement Transformation Loan Risk Compensation Filing Information Form” (Appendix 2), the “Shandong Province Science and Technology Achievement Transformation Loan Risk Compensation Filing Enterprise Acknowledgment and Commitment Letter” (Appendix 3), and any other materials required by the Municipal Science and Technology Bureau based on actual circumstances.

2. Filing Review

The Municipal Science and Technology Bureau shall compile loan filing information on a quarterly basis and submit the “Shandong Province Science and Technology Achievement Transformation Loan Risk Compensation Filing Summary Form” (Appendix 4) along with the corresponding filing materials to the Provincial Department of Science and Technology. The Provincial Department of Science and Technology shall complete the review and issue a public announcement.

II. Risk Compensation for Loans for the Commercialization of Scientific and Technological Achievements

(1) Eligible Entities and Conditions

The recipients of risk compensation for loans for the transformation of scientific and technological achievements are provincial branches of commercial banks or head offices of local banks, which must also meet the following conditions:

1. The loans for the commercialization of scientific and technological achievements have been filed and announced in accordance with established procedures.

2. The loan has been classified as non-performing due to delinquency for no more than three months.

3. The lending bank has carried out post-loan management in accordance with established procedures and has actively pursued collection after the loan became overdue, but has still been unable to recover the full amount of the loan.

4. The annual non-performing loan ratio is within 5%.

Exclusions from compensation include: principal losses resulting from enterprises’ misuse of funds for technology transfer loans; technology transfer loans issued by lending banks through non-compliant credit approval, fraudulent practices, or violations of relevant national laws and regulations; and loans that have already received support under other provincial risk compensation policies.

(II) Compensation Standards

The provincial government provides a 35% risk compensation based on the principal amount of the non-performing loan as filed; the municipal risk compensation ratio is determined by each city based on actual conditions, and in principle, shall not be less than 35% of the principal amount of the non-performing loan as filed. The remaining loan losses shall be borne by the lending bank.

(3) Compensation Process

1. Compensation Application

The lending bank shall first apply for compensation from the underwriting insurance (guarantee) company. If the compensation is insufficient to cover the principal loss, the bank shall submit a risk compensation application (Appendix 5) to the registered municipal science and technology bureau within the reporting period; if there is no underwriting institution, the bank may submit the risk compensation application directly.

After verifying the losses and confirming the amounts of risk compensation funds at both the provincial and municipal levels, the Municipal Science and Technology Bureau shall issue a formal report (Appendix 6) and submit it to the Provincial Department of Science and Technology.

2. Compensation Review

The Provincial Department of Science and Technology completes the review of the risk compensation application, issues the provincial risk compensation plan, and submits it to the Provincial Department of Finance. Once the Provincial Department of Finance allocates the risk compensation funds, the Provincial Department of Science and Technology disburses them to the lending bank. Each city then implements municipal-level risk compensation in accordance with the provincial risk compensation plan.

(IV) Recovery of Loan Losses and Write-off of Risk Compensation

The lending bank shall fulfill its responsibility for recovering losses on non-performing principal. Upon recovery of such losses, the funds must be returned in the same year via the original channels and at the original proportion. For non-performing principal that has received risk compensation and is determined to be irrecoverable after due diligence, the lending bank shall write off the loan and submit an application for risk compensation write-off (Attachment 7) to the municipal science and technology bureau on file. After review by the municipal science and technology bureau, the application shall be submitted to the Provincial Department of Science and Technology for verification.After review by the Provincial Department of Science and Technology, an announcement regarding the write-off of risk compensation shall be issued periodically and submitted to the Provincial Department of Finance.

III. Other Matters

(1) Effective December 30, 2020, and thereafter, the filing of loans for the commercialization of scientific and technological achievements and risk compensation shall be implemented in accordance with the relevant provisions of this Guide. For loans for the commercialization of scientific and technological achievements that were filed by December 29, 2020, the relevant provisions of the “Administrative Measures for the Risk Compensation Fund for Loans for the Commercialization of Scientific and Technological Achievements in Shandong Province” (Lu Ke Zi [2018] No. 145) shall continue to apply.

(2) The Provincial Department of Science and Technology and the Provincial Department of Finance are responsible for interpreting these guidelines.

Attachment:

1. Workflow Chart for the Filing and Risk Compensation of Loans for the Commercialization of Scientific and Technological Achievements in Shandong Province

2. Shandong Province Science and Technology Achievement Transformation Loan Risk Compensation Filing Information Form

3. Informed Consent Form for Enterprises Filing for Risk Compensation for Loans for the Commercialization of Scientific and Technological Achievements in Shandong Province

4. Summary Table of Filing Registrations for Risk Compensation on Loans for the Commercialization of Scientific and Technological Achievements in Shandong Province

5. Application Letter for Risk Compensation for Loans for the Commercialization of Scientific and Technological Achievements by ** Company (Sample)

6. Report on the Verification and Approval Status of ** Bank’s Application for Risk Compensation for Loans for the Commercialization of Scientific and Technological Achievements (Sample)

7. Application Materials for the Write-off of Risk Compensation for Loans for the Commercialization of Scientific and Technological Achievements in Shandong Province