What are Construction and Development Loans?

Capital construction loans are loans made by banks to use credit funds for construction projects included in the capital construction plan. Such loans are mainly handled by the Construction Bank, and other professional banks also undertake part of the loan business. The loans are targeted at national and collective enterprises that have the status of legal persons, implement independent accounting, and have the ability to repay, as well as professional companies that implement unified accounting or financial contracting. Capital construction loans such as the competent department and the administrative bureau implement a mandatory plan. Loans arranged annually must be included in both the national comprehensive credit plan and the national investment plan. Loans that do not have a plan must not be arranged. The construction unit applying for a loan shall, based on a thorough feasibility demonstration of the economic rationality, technical feasibility and construction necessity of the proposed project, send the project proposal and feasibility study report to the head office of the professional bank and the relevant province, The branches of autonomous regions, municipalities directly under the Central Government, and cities with separate plans shall conduct assessments to determine whether to issue loans. The loan conditions require that the borrowing unit must have the status of a legal person, implement independent accounting in the economy, and be able to bear economic responsibilities. The products produced by the project are marketable, have good economic benefits, and have the ability to repay loans. At the same time, they must have at least 10% of the total investment ~ 30% of own funds. The loan bank shall sign a loan contract with the borrowing unit for the project that meets the loan conditions. Banks that issue capital construction loans generally require the property of the borrowing unit to provide mortgages or repayable legal persons to provide guarantees. Property mortgage or legal person guarantee is specified in the loan contract. After the loan contract expires, the borrowing unit cannot pay off the principal and interest of the loan, and the bank shall compensate the mortgaged property in accordance with the contract, or require the guarantee unit to pay it on its behalf. The borrowing unit shall repay the principal and interest within the time limit stipulated in the contract. ^[1]

Capital construction loan

All state-owned and collective enterprises that have the status of a legal person, implement independent accounting in the economy, can bear economic responsibilities, and have the ability to repay,

Loan project

Chapter I General Provisions

Article 1 These Measures are formulated in accordance with the relevant provisions of the Budget Law of the People's Republic of China and the Implementing Regulations in order to strengthen the management of the central government's discounted funds for capital construction loans, improve the efficiency of the use of fiscal funds, and give better play to its policy support and guidance role.

Article 2 The "financial discounted funds" as mentioned in the present Measures refers to the funds arranged by the central budget for special use in discounting capital construction loans.

Article 3 The capital construction loans referred to in these Measures refer to loans for capital construction projects that are provided by various banks and meet the scope of interest discounts provided for in these Measures.

Article 4 The capital construction projects referred to in these measures are, in principle, central-level large and medium-sized projects under construction arranged for capital construction loans, and infrastructure projects in national-level high-tech industrial development zones approved by the State Council.

The classification standards for large and medium-sized projects are still implemented in accordance with the original project approval standards determined by the State Planning Commission, that is, the total investment of operating projects is more than 50 million yuan (including 50 million yuan), and the total investment of non-operating projects is more than 30 million yuan (including 30 million yuan) for large and medium-sized projects.

Chapter II Discount Policy

Article 5 The principle of discounted funds follows the principle of paying first and then discounting, that is, the project unit must apply to the finance department for discounting interest based on the interest payment list issued by the loan bank.