According to China's current regulations, under normal circumstances, when undertaking loan guarantee business, the fees charged by guarantee institutions shall not exceed 50% of the bank loan interest rate in the same period. Based on the analysis that the current one-year loan interest rate in China is 6.56%, combined with the current credit line range of banks to guarantee companies of 5- 10 times, the current annual interest rate of registered capital of guarantee institutions in China is 16.4%-32.8%.
Generally speaking, the credit line granted by banks to guarantee companies is usually only 5 times of their registered capital, resulting in the annual interest rate of registered capital of guarantee institutions in China being only 16.4%, and the multiple of guarantee credit in many provinces is less than 5 times. Therefore, the profitability of the loan guarantee business in China is extremely low. Take the guarantee industry in Dongguan as an example:
According to the data of "China Guarantee Industry Market Foresight and Investment Strategic Planning Analysis Report Foresight" issued by Foresight Industry Research Institute, as of August 20 13, there were more than 40 financing guarantee companies in Dongguan, Guangdong Province, with a total registered capital of nearly 7 billion yuan. The balance of financing guarantee business is only about 1000 billion yuan, and the magnification is only 1.5 times. According to relevant regulations, guarantee institutions,
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