The target customers of microfinance companies are often excluded from the formal financial system, because they can't provide the collateral required by formal financial institutions and can't meet the formal loan approval standards. Small loan companies came into being to provide financial services for low-income groups and micro-enterprises. The provisions of the Guiding Opinions on small loan companies fully reflect this important feature.
2. The loan speed is fast, the loan procedure is simple, and the approval time is short.
Traditional financial institutions such as rural credit cooperatives, postal savings banks and agricultural banks follow the general process of "pre-lending investigation, in-lending review and post-lending management", which leads to slow lending, complicated procedures and long time.
Although microfinance companies all over the country basically refer to the above model, relatively speaking, the approval procedures of microfinance companies are more convenient, quick, simple and efficient. The investigation, approval and issuance of a loan takes only half a day at the earliest, and generally takes only two days at the most. It can be said that "short, flat and fast" is the main feature of loan issuance by microfinance companies.
3. It has a relatively flexible pricing mechanism of expected annualized interest rate and a high level of expected annualized interest rate.
The expected annualized interest rate of loans of microfinance companies is generally higher than that of financial institutions and non-governmental organizations, and lower than the average level of non-governmental lending. The expected annualized interest rate distribution has no obvious hierarchical characteristics, but the expected annualized interest rate of agricultural loans and aquaculture loans is significantly lower than that of industrial and commercial loans, transportation and service industries, and the expected annualized interest rate of commercial loans is lower than that of industrial loans.
Accordingly, Article 4 of the Guiding Opinions stipulates that "microfinance companies shall operate according to the principle of marketization, and the upper limit of the expected annualized interest rate of loans shall be released, but it shall not exceed the upper limit set by the judicial department, and the lower limit shall be twice the expected annualized interest rate of the benchmark loan announced by the People's Bank of China, and the specific floating range shall be determined independently according to market principles". Among them, according to the relevant judicial interpretation, the upper limit of the expected annualized interest rate should be four times that of the bank loans of the same grade in the same period.