&quot;banks will only lend to SOEs or big private companies&quot;<p>Banks&#x27; prefer to lend to SOEs or larger companies, sure, and those customers get the best rates.  Credit _is_ available from banks for smaller businesses, but banks&#x27; role in this lending is a little different than in the US&#x2F;UK.<p>A bank making a small business loan in the UK is serving two functions: (i) providing capital, (ii) taking on credit risk.  In China, many small business loans are granted by banks (and live on a bank&#x27;s balance sheet), but the credit risk is taken on by a credit guarantee company.[0][1]<p>The small business will pay interest to the bank, and fees to the guarantee company.<p>&quot;there isn&#x27;t much credit for small private companies&quot;<p>There is, it&#x27;s just that (i) when banks lend money sourced from their wealth management products (理财产品) , it doesn&#x27;t show up on banks&#x27; balance sheets, and (ii) there are other non-bank lenders.<p>Search for &#x27;wenzhou rate&#x27;, &#x27;shadow banking&#x27; or &#x27;china wealth management&#x27; if you&#x27;re interested in more detail, e.g. see the &#x27;wealth management&#x27; section of this paper[2].<p>[0] <a href="http:&#x2F;&#x2F;www.ft.com&#x2F;cms&#x2F;s&#x2F;0&#x2F;2653ed8e-21a2-11e0-9e3b-00144feab49a.html" rel="nofollow">http:&#x2F;&#x2F;www.ft.com&#x2F;cms&#x2F;s&#x2F;0&#x2F;2653ed8e-21a2-11e0-9e3b-00144feab4...</a><p>[1] <a href="http:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;next-up-for-chinas-central-bank-how-to-get-loans-to-small-firms-1431344756" rel="nofollow">http:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;next-up-for-chinas-central-bank-...</a><p>[2] <a href="http:&#x2F;&#x2F;journals.sub.uni-hamburg.de&#x2F;giga&#x2F;jcca&#x2F;article&#x2F;viewFile&#x2F;851&#x2F;852" rel="nofollow">http:&#x2F;&#x2F;journals.sub.uni-hamburg.de&#x2F;giga&#x2F;jcca&#x2F;article&#x2F;viewFil...</a>