The Notice on Commercial Banks Issuing Letter of Guarantee to Replace Pre-sale Supervision Funds points out that real estate enterprises can apply to commercial banks for issuing letter of guarantee to replace the funds within the supervision quota after the funds in the supervision account reach the supervision quota stipulated by the housing and urban-rural construction departments. According to the principle of marketization and rule of law, commercial banks can make independent decisions on the basis of fully evaluating the credit risk, financial status and reputation risk of real estate enterprises, and carry out the business of replacing pre-sale supervision funds with letters of guarantee with high-quality real estate enterprises.

the notice requires that the letter of guarantee can only be used to replace the funds within the supervision limit of the pre-sale funds supervision account established in accordance with the law. The replacement amount shall not exceed 3% of the funds required to ensure the completion and delivery of the project in the supervision account, and the replaced supervision funds shall not be less than 7% of the funds required to ensure the completion and delivery of the project in the supervision account. In addition, the circular requires commercial banks to reasonably determine the term of the letter of guarantee to ensure that it matches the project construction cycle.

The notice requires that commercial banks should refer to the credit standard of development loans and choose high-quality real estate enterprises with stable operation and good financial status when issuing letters of guarantee to replace pre-sale supervision funds. The letter of guarantee is fully included in the unified credit line for real estate enterprises and their affiliated groups. It is necessary to guard against the risk of letter of guarantee business through margin, counter-guarantee of real estate enterprises and other credit enhancement measures.

The notice requires that real estate enterprises should use the pre-sale supervision funds replaced by the letter of guarantee according to regulations, and give priority to project construction and repayment of debts due to the project, but not to purchase land, add other investments or repay shareholders' loans. Real estate enterprises should undertake the obligation to supplement the funds in the supervision account according to the agreement, and ensure that the project construction funds are sufficient.