In China, many small loan companies are formal and have licenses issued by financial supervision departments. However, there are some informal microfinance companies in the credit market.

1. See if there is a license

Under normal circumstances, a reliable microfinance company will hang its business license and loan business license in a conspicuous place of the company. In addition, reliable micro-loan companies can check the certification status online. If you find that the microfinance company has no license, then it must be unreliable.

2. Look at the shareholders

The stronger the shareholders behind the microfinance company, the higher the reliability. If the shareholders of a microfinance company are central enterprises, large state-owned enterprises and enterprises with high social visibility, then this microfinance company is still relatively reliable.

3. Is the fee open and transparent

Generally speaking, a reliable small loan company will specify all loan fees, and the annualized rate is within 36%. If a small loan company intends to cover up its fees, then this company is unreliable.

Extended information

Many financial institutions and loan-assisting companies carry out joint loan business model, and they do not have certain "online risk control technology", so they use loan-assisting companies to do "risk control" for themselves. However, the risk control criteria of general loan companies and financial institutions are different, and their operating roles are different, which can easily lead to "risk control failure" and cause a large area of default risk.

The Beijing Banking Insurance Regulatory Bureau issued the Notice on Standardizing the Cooperative Business between Banks and Financial Technology Companies and Internet Insurance Business (hereinafter referred to as the Notice), in which "online loan cooperation" was listed as the primary position of key risk prevention and control, and it was proposed to strictly implement the principle of independent risk control to prevent credit funds from illegally flowing into peer-to-peer lending platform, real estate market and other fields.