Original Title: Notice from the Department of Science and Technology of Shandong Province and the Department of Finance of Shandong Province on Issuing the "Measures for Risk Compensation and Interest Subsidy for Loans Related to the Commercialization of Scientific and Technological Achievements in Shandong Province"
Chapter I General Provisions
Article 1 To thoroughly implement the "Implementation Opinions of the People’s Government of Shandong Province on Accelerating the Construction of a Science and Technology Powerhouse in the New Era" (Lu Zheng Zi [2022] No. 225) andthe "Notice of the General Office of the People’s Government of Shandong Province on Issuing Several Measures to Strengthen the Synergy of Science and Technology, Finance, and Financial Services to Support Enterprise Innovation and Development" (Lu Zheng Ban Zi [2023] No. 155), to promote the deep integration of science and technology with finance, to guide banks in increasing credit support for science and technology-based small and medium-sized enterprises (SMEs), and to reduce banks’ lending risks and enterprises’ financing costs, these Measures are hereby formulated.
Article 2 The term “Shandong Provincial Science and Technology Achievement Transformation Loan” (hereinafter referred to as “Lu Ke Dai”) as used in these Measures refers to loans issued by banks to science and technology-based small and medium-sized enterprises (SMEs) to support corporate scientific research and development, achievement transformation, industrialization, and other science and technology innovation activities. The loans shall not be used for on-lending, entrusted lending, participation in private lending, investment in capital markets, or personal consumption.
Article 3. The term “bank” as used in these Measures refers to banks independently selected by the science and technology bureaus of each prefecture-level city to cooperate on “Lu Ke Dai” business.
Article 4. The term “early-stage or start-up science and technology-based SMEs” as used in these Measures refers to registered science and technology-based SMEs that have been in operation for no more than 5 years (60 months), employ no more than 300 people, and had total assets and annual sales revenue of no more than 50 million yuan in the previous fiscal year.
Article 5 The term “risk compensation” as used in these Measures refers to the provision of compensation at a certain percentage to banks that incur non-performing principal losses from the issuance of “Lu Ke Dai” loans.
Article 6. The term “interest subsidy” as used in these Measures refers to a one-time interest subsidy at a certain percentage provided to “Lu Ke Loan” borrowing enterprises that repay principal and interest on time.
Article 7 Risk compensation funds shall be allocated by provincial and municipal-level finance departments, while interest subsidy funds shall be allocated by the provincial finance department. Provincial-level risk compensation and interest subsidy funds shall be drawn from the provincial science and technology innovation development fund; municipal-level risk compensation funds shall have their allocation channels determined by the science and technology departments of each prefecture-level city in conjunction with their respective finance departments.
Chapter II Division of Responsibilities
Article 8 The Provincial Department of Science and Technology is responsible for publishing the list of science and technology-based small and medium-sized enterprises; organizing the filing of “Lu Ke Dai” applications and the application and review of risk compensation and interest subsidy funds across the province; and overseeing the formulation, execution, and performance management of provincial-level risk compensation and interest subsidy funds.
Article 9 The Provincial Department of Finance is responsible for reviewing the budget for provincial-level risk compensation and interest subsidy funds, approving and disbursing funds, and leading the performance management of the fund budget.
Article 10 The Science and Technology Bureaus of prefecture-level cities shall be responsible for selecting partner banks; organizing the filing of local “Lu Ke Loan” applications, as well as the application, review, and recommendation of risk compensation and interest subsidy funds; and cooperating in performance management; they shall be responsible for the formulation, execution, and performance management of municipal-level risk compensation funds; and they shall guide the Science and Technology Bureaus of counties (cities, districts) in completing relevant tasks.
Article 11 The Finance Bureau of each prefecture-level city shall be responsible for reviewing the budget for risk compensation funds at its level, approving and disbursing funds, and leading the performance management of the fund budget.
Article 12. Banks shall independently approve and disburse loans, apply for filing in accordance with regulations, and strengthen post-loan management; they shall apply for risk compensation funds in accordance with regulations, handle the recovery of non-performing loans, risk resolution, and the return of the fiscal portion of recovered funds; they shall regularly report on loan progress and risk warnings to the Science and Technology Bureau of the prefecture-level city where the loan is filed, and cooperate in loan performance management.
Article 13. Enterprises shall use loan funds in accordance with the terms of the loan contract and the intended use stated in the filing commitment; they shall cooperate with banks in post-loan management and the application for risk compensation funds; they shall apply for loan interest subsidy funds in accordance with regulations and cooperate in loan performance management.
Chapter III: Eligible Entities, Conditions, and Standards
Article 14: The beneficiaries of the “Lu Ke Loan” program are science and technology-based small and medium-sized enterprises registered within Shandong Province (excluding Qingdao). The outstanding loan balance per enterprise included in the risk compensation filing shall not exceed 20 million yuan.
Article 15 The recipients of risk compensation funds are provincial branches of banks or head offices of local banks, which must simultaneously meet the following conditions:
(1) The loan has been filed and announced by the Provincial Department of Science and Technology.
(2) The loan has been classified as a non-performing loan in accordance with the “Measures for the Classification of Financial Asset Risks of Commercial Banks” (Order No. 1 [2023] of the China Banking and Insurance Regulatory Commission and the People’s Bank of China).
(3) The bank has diligently conducted post-loan management to ensure the loan was used for its intended purpose, and the loan remains unrecovered despite active collection efforts for overdue loans.
Article 16 The provincial risk compensation standard is 35% of the principal amount of the non-performing filed loan. For principal losses on unsecured loans within the credit limit of early-stage or start-up science and technology-based small and medium-sized enterprises that have passed the credit enhancement assessment via the “Kerongxin” platform, the provincial risk compensation ratio may reach up to 45%. The municipal risk compensation ratio shall not be lower than the provincial risk compensation ratio for the principal amount of the non-performing loan in question. The remaining losses shall be borne by the bank.
Article 17: Interest subsidy funds are available to enterprises with filed loans that were filed after December 16, 2020, and have made timely principal and interest payments. An enterprise may select any one eligible loan to apply for an interest subsidy. The subsidy rate is 40% of the interest actually paid by the enterprise, with a maximum subsidy of 500,000 yuan per enterprise, available only once.
Article 18: Risk compensation or interest subsidy funds shall not be provided for registered loans that fall under any of the following circumstances:
(1) Violation of the agreed loan purpose or inability to prove that the loan was used for the agreed purpose.
(2) The loan falls under the circumstances specified in the “Implementation Opinions on Deepening the ‘Green Threshold’ System for Fiscal Funds Involving Enterprises” (Lu Cai Zi Huan [2022] No. 29) as ineligible for support.
(3) Fraud or falsification of information during the loan disbursement, filing, or application for risk compensation or interest subsidy funds.
(4) The loan has already received support from other provincial-level fiscal risk compensation or interest subsidy funds.
(5) Other circumstances where support is not provided.
Chapter IV Loan Filing Management
Article 19 “Lu Ke Dai” loans are subject to routine filing management. Banks must submit filing applications within three months of loan disbursement; loans included in the filing will be eligible for risk compensation and interest subsidy support.
Article 20: The interest rate for filed loans shall not exceed the Loan Prime Rate (LPR) for the corresponding term published by the People’s Bank of China plus 200 basis points. Loans that have not purchased “Lu Ke Dan” or “Lu Ke Bao” loan financing services.
Article 21: The term of filed loans shall be agreed upon by the bank and the enterprise; banks are encouraged to issue medium- to long-term loans with terms of three years or longer to enterprises.
Article 22. For registered loans that are renewed through principal-free rollovers, emergency bridging loans, or principal and interest repayment extensions in accordance with relevant regulations, a new application for registration may be submitted.
Article 23: Applications for loan filing shall be reviewed step-by-step by the science and technology bureaus of counties (cities, districts) and prefecture-level cities, then recommended to the Provincial Department of Science and Technology, which shall review them and issue periodic announcements.
Chapter V Risk Compensation Management
Article 24. The deadline for accepting annual centralized applications for risk compensation is the end of October each year. If a “Lu Ke Loan” becomes delinquent, the bank shall, after classifying it as non-performing in accordance with relevant regulations, submit an application for risk compensation to the Science and Technology Bureau of the prefecture-level city where the loan was filed.
Article 25 Upon receiving a risk compensation application, the Science and Technology Bureau of the prefecture-level city shall, in conjunction with the Science and Technology Bureau of the county (city, district), verify the use of the loan through on-site investigations and expert evaluations. It shall propose a determination of principal loss and recommendations for risk compensation, issue a formal report, and submit it to the Provincial Department of Science and Technology for review. Upon approval, the results shall be publicly announced for five working days.
Article 26. Risk compensation funds shall be reviewed in the current year and disbursed in the following year. Each municipal science and technology bureau shall complete municipal-level risk compensation in accordance with the provincial risk compensation plan. Banks shall ensure that risk compensation funds are used to offset principal losses on non-performing loans.
Article 27: Banks shall establish ledgers for the recovery of non-performing principal, the disposal of collateralized assets, and the bulk transfer of non-performing loans. Within 60 days of recovering non-performing principal, banks shall return the recovered funds—after deducting relevant expenses such as litigation or transaction costs—to the provincial and municipal treasuries in the original proportion and through the original channels. The Science and Technology Bureaus of prefecture-level cities shall monitor banks’ recovery and disposal activities annually, compile the data, and report it to the Provincial Department of Science and Technology.
Chapter VI Management of Loan Interest Subsidies
Article 28. The deadline for accepting annual interest subsidy applications is the end of October each year. After loan enterprises repay principal and interest on time, they shall submit applications for interest subsidy funds in accordance with regulations.
Article 29: Applications for interest subsidy funds shall be reviewed and recommended by the Science and Technology Bureaus of counties (cities, districts) and prefecture-level cities through a tiered review process to the Provincial Department of Science and Technology for re-examination; upon approval, they shall be publicly announced for 5 working days.
Article 30. Interest subsidy funds are reviewed in the current year and disbursed in the following year, with the Provincial Department of Science and Technology transferring the funds directly to the enterprises.
Chapter VII: Performance Evaluation and Supervision
Article 31. The Provincial Department of Science and Technology shall conduct an annual performance evaluation of the implementation of the “Lu Ke Dai” program. Cities and banks that achieve outstanding evaluation results shall be publicly commended.
Article 32. Any entity found to have fraudulently obtained risk compensation or interest subsidy funds, or failed to truthfully report and promptly return such funds after recovery, shall have the relevant funds recovered and its eligibility for application revoked upon verification. Any violations of regulations, discipline, or laws discovered shall be handled in accordance with relevant national laws and regulations, including the "Budget Law of the People’s Republic of China" and its implementing regulations, the "Supervision Law of the People’s Republic of China," and the "Regulations on Penalties and Disciplinary Actions for Fiscal Law Violations." Cases suspected of criminal offenses shall be transferred to the relevant authorities for handling in accordance with the law.
Article 33 Banks are encouraged to incorporate their service to science and technology enterprises into the performance evaluations of their subordinate units and leadership teams. When determining liability for non-performing loans or conducting performance evaluations, the principal losses already compensated by provincial or municipal-level fiscal funds shall be deducted. Efforts shall be made to promote the establishment of a due diligence exemption mechanism for loans to science and technology enterprises by banks, appropriately increasing the tolerance for non-performing loans to early-stage and start-up science and technology enterprises. Where due diligence has been exercised without fault, liability shall be exempted in accordance with laws and regulations.
Chapter VIII Supplementary Provisions
Article 34 The Provincial Department of Science and Technology and the Provincial Department of Finance shall be responsible for interpreting these Measures.
Article 35 These Measures shall take effect on January 24, 2024, and remain valid until December 31, 2028.Applications for risk compensation regarding loans filed prior to the implementation of these Measures shall be processed in accordance with the "Measures for the Administration of the Shandong Provincial Fund for Risk Compensation of Loans for the Commercialization of Scientific and Technological Achievements" (Lu Ke Zi [2018] No. 145) and the "Operational Guidelines for Risk Compensation of Loans for the Commercialization of Scientific and Technological Achievements in Shandong Province" (Lu Ke Zi [2021] No. 19).
