Providing Small & Medium Enterprises Channels of IPR Based Financing.　Ministry of Economic Affairs Proposed Legislation of Finance Companies Act.

　In the past three years, Small & Medium Enterprise Center has spent continuous efforts in the financing program for promoting exchange of Intellectual Property (IP) owned by the small & medium enterprises (SME).  This financing program aims to find financing channels for SME.

　With the impacting factors such as sub-prime mortgage storm, slowing economic growth and the dual-card storm (credit cards and cash cards), banking industry adopts a more conservative approach in granting loans.  Therefore, individual or enterprise with poor credit rating or insufficient secured mortgages finds it extremely difficult to obtain funds from banks.  SME has to turn into an alternative option by borrowing from the non-bank lending channel -- finance company.  Finance company in Taiwan focuses its main area of business on financing transactions limited to non-banking nature.  In other words, finance company is not permitted to accept savings deposit; however, finance company is allowed to provide loans for consumption and commercial transactions, such as financial leasing, factoring and sale by installment payment.

　In the past ten plus years, various government organizations such as Banking Bureau, Department of Commerce, Council for economic planning and development and Financial Supervisory Commission have been proposing legislation of the Finance Companies Act.  Nevertheless, owing to factors that each organization holds its own view on how and to what extent finance companies should be governed; and each organization has its own interpretation on the relevant governing scope of the regulations of the Finance Companies Act, the legislation of the proposed Finance Companies Act is pending legislation in the Legislative Yuan.  In view of the legislation of the proposed Finance Companies Act will substantially enhance the IPR based financing, the legislation of the said Act needs to be produced.

　Currently SME Credit Guarantee Fund (Fund) assists SME in handling IPR based financing by offering direct guarantee.  Before the Fund makes a decision for providing direct guarantee to SME, it will first evaluate (a) value of the IPR and (b) the management team’s capability to enhance the value of IPR.  (2008.7)

/DC