Chinese Firms Request Loans Due To Coronavirus

To help mitigate the impact of the coronavirus through business lending, over 300 Chinese firms are looking for bank loans totaling a minimum of $8.2 billion. The epidemic has infected over 900 people in the nation and infected over 40,000, while authorities have temporarily halted transportation links, closed facilities where crowds gather and blocked off cities, Reuters reported.

Meituan Dianping, the food delivery firm, is one of the possible borrowers along with Didi Chuxing Technology Co, the ride-hailing company, and Xiaomi Corp, the maker of smartphones, among others per unnamed sources in the report Monday (Feb. 10). The sources also noted that the firms looking for loans had been most impacted by the epidemic or involved in the control of it.

Meituan Dianping is looking for 4 billion yuan to, in part, help finance complimentary food as well as deliveries to medical staff in the outbreak’s epicenter. Xiaomi, for its part, is looking for $716 million in loans to make as well as sell medical equipment with the inclusion of thermometers in addition to masks.

The companies looking for loans in the Chinese capital are said to get preferred interest rates and quickened approvals. One unnamed sourced said in the report, “Banks will have the final say on lending decisions.” The source continued, “the interest rates are likely to be on par with those offered to banks’ top clients.”

In separate news, China’s central bank was to release a set of funds meant to fight the coronavirus this week and will start to offer the service on a weekly basis. The Peoples’ Bank of China (PBOC) said the move was intended to soften the impact of the deadly virus.

The virus has also been impacting company profits, while industrial production and retail spending have been weakened. Moreover, economic analysts have tempered their expectations in the wake of the news.

Economists at Barclays reportedly put out a statement saying that the lethal virus, comparable to the outbreak of SARS, has had far-reaching effects for all sorts of industries. And, even if the virus is contained, the economic impact would come out in the first-quarter activity of China.