Entrusted loan is actually equivalent to the borrowing of funds between enterprises, but because it is explicitly prohibited in China's General Rules for Loans, it is not allowed to transfer funds between accounts of different legal entities without actual trade background. Therefore, mutual financing between enterprises can only be achieved through entrusted loans.
For enterprises with abundant funds, it is obviously unwise to leave a lot of funds idle in accounts and only rely on the interest rate of small bank deposits to obtain income. If this capital is invested, many enterprises will not be willing to carry out investment activities with high returns and high risk factors because each enterprise has a certain risk factor. At the same time, investment will inevitably lead to losses. So how to effectively use such a large amount of idle funds? Entrusted loans just cater to the requirements of surplus enterprises in this regard. Effectively improve the utilization rate of funds within the enterprise. It provides an effective means for enterprises to obtain additional income.
legal ground
Law of People's Republic of China (PRC) on Commercial Banks Article 34 Commercial banks shall, according to the needs of national economic and social development, conduct loan business under the guidance of national industrial policies.
2. What does entrusted loan mean? In a popular way.
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3. What is a trust loan?
Definition of Trust Loan Trust loan refers to the loans granted by trust institutions to self-approved units and projects by using their own funds such as trust deposits within the scope prescribed by the state. Classification of trust loans According to whether the trustor puts forward specific requirements, trust loans can be divided into two categories: Class A trust loans and Class B trust loans; According to the purpose of the loan, it can be divided into fixed assets trust loan, working capital trust loan and temporary working capital trust loan.
According to the different subjects of project selection and the different standards and requirements of clients, loans are divided into Class A trust loans and Class B trust loans.
The so-called Class A trust loan refers to the loan project designated by the client, and the client is responsible for the project risk; Class B loan is the project selected by the trustee, and the risks shall be borne by the trustee accordingly. The difference between trust loan and entrusted loan: the object and purpose of entrusted loan are designated by the client, while the object and purpose of trust loan are selected by the trust institution; The management of entrusted loans is relatively loose, while the management of trust loans is as strict as that of bank loans.
Compared with bank loans, the interest rate of trust loans has a certain floating range. Therefore, trust institutions can support the special and reasonable capital needs of some enterprises under the conditions permitted by national policies. The main business of trust loans trust loans mainly include joint venture investment trust loans, technical transformation trust loans, compensation trade trust loans, housing trust loans and so on.
4. What does entrusted loan mean?
In entrusted loans, the entrusted loan interest rate involved shall be determined by the entrusting party, but it shall not exceed the loan interest rate and floating range for the same period stipulated by the People's Bank of China. The business expenses involved in entrusted loans are transferred by entrusted loans, which mainly involve the following expenses: 1. Entrusted loan expenses: The bank accepts the client's bid for entrusted loans and charges the client in proportion according to the agreed terms such as entrusted loan amount, loan term and liability for breach of contract. Followed by the stamp duty on loan contracts. Generally, for entrusted loan transactions, stamp duty is paid once for each transaction, and stamp duty is paid at 0.5 ‰ of the loan amount for each entrusted loan. Under the cash pool mode with entrusted loans as the main mode, enterprises and local taxation bureaus generally negotiate to determine the total amount of loans within a certain period of time, and pay stamp duty regularly at the tax rate of 0.5 ‰. Finally, the interest expenses involved in entrusted loans. Under the cash pool model, the interest rate of mutual loans between accounts should be within the benchmark interest rate of deposits and loans stipulated by the central bank. Once the interest rate exceeds this range, it may be questioned by the tax authorities because of suspected transfer pricing. Interest income and interest expenses of entrusted loans cannot be declared and taxed on a net basis, and business tax is levied on each interest income at 5% of the interest amount, which can be withheld and remitted by the bank. The income tax expenses incurred shall be paid by the enterprise itself. Legal Basis According to the third paragraph of Article 7 of the General Rules for Loans of the People's Bank of China, entrusted loans are loans provided by clients such as government departments, enterprises, institutions and individuals, and issued by financial institutions (i.e. trustees) according to the loan object, purpose, amount, term and interest rate determined by the clients. The entrusted financial institution is only responsible for issuing, supervising the use and assisting in recovery, and only collects fees from it, and does not bear any form of loan risk.