Alibaba.com, Alibaba Group’s international wholesale trading website, has partnered with seven Chinese banks to offer unsecured business loans to smallPRCexporters.
Under the new program, small businesses that participate in Alibaba’sOneTouch trade-services platform can borrow from RMB 1 million ($161,000) up to RMB 10 million ($1.61 million) depending upon their recent overseas sales histories and creditworthiness.
Banks joining the program are Bank of China, China Merchants Bank, China Construction Bank, Ping An Bank, Postal Savings Bank of China, Bank of Shanghai, and Fuzhou City-based Industrial Bank, Alibaba.com announced today in a press release.
The program is the latest move by Hangzhou, China-based Alibaba.com, one of the world’s largest Web-based business directories, to expand its business model by providing a slate of international trade services and financing, and to become a platform for conducting transactions instead of just matching wholesale buyers with suppliers.
Alibaba.com last year introduced a financing program called e-Credit Linethat provides open account-style financing to China-based suppliers and theirinternational customers.
Alibaba.com is effectively acting as a marketing agent for banks by funneling business-loan customers their way. But in a departure from conventional practices, loanson offerthroughthe websiteare unsecured and creditworthiness is determined by trading records gathered via theOneTouch platform.
Wei Qiang, general manager of Alibaba.com’s integrated export services division, said in a statement that it’s difficult for banks to track trading data for exporters. Alibaba’s “big data” solution helps to quickly and accurately assess a given company’s ability to repay loans based on trading activity, an indication of cash flow.Bank of China official Zhong Xiangqun agreed, saying that information fromOneTouchreduces loan risks for banks.
Under the new program, loan amounts companies can qualify for depend on export data covering exporters’ trading histories over the prior six months. Applicants are required in that timeframe to have completed a minimum of three deals worth a total of at least $100,000. Those who meet the requirements are entitled to borrow 1 RMB for everyU.S. dollar in exports shipped.
Borrowers will be subject to annual interest rates ranging from 8 percent to 18 percent, depending on their credit scores. Alibaba.com did not offer details on how long companies have to repay the loans, which are meant to provide small businesses with needed capital for operations and business development.
Alibaba.com suppliers who do not useOneTouch can also apply for smaller loans under the program, the company said. Loan amounts are limited to RMB 0.8 for every U.S. dollar’s worth of exports. Alibaba.com will evaluate creditworthiness based on shipment data from customs agencies and logistics companies, with participating banks making final lending decisions.
Alibaba.com officials yesterday also announced that a program unveiled in May offering suppliers rebates of RMB .03 for every $1 worth of goods exported throughOneTouch is continuing as the companyworks tobuild participation in the platform.