Guang Group Needs ￥500 Million; High interest Loans To Blame

One of the roles played by trusts was in providing high interest bridge loans. These stories out of China where the "capital chain is broken" are often stories where a bridge loan would solve the problem. However, trust finance is harder to come by and banks aren't willing to take on as much risk anymore. For the Guang Group this may be a life or death moment, with as much as ￥2.7 billion borrowed and ￥2 billion of that borrowed from individuals, and a debt ratio of 70-80%.

From 2011 to 2013, Guang Group had sales of ￥17 billion, far exceeding its debts. The problem is that Guang Group is paying extremely high interest rates for its capital.

Usury engulfed the company's profits. Guangyao private lending data obtained by reporters, the company's two largest private borrowers, for example, Shenzhen Jinxin Group lent 400 million yuan to Guang Group, Guang Groups has repaid 600 million yuan and still owes 300 million yuan; Shenzhen Zhi Wei Group lent Guang Group more than 200 million, Guang aleady repaid 300 million yuan and still owes 300 million.

高利贷拖垮光耀 中小房企存亡倒计时？