If not for the 30,000-yuan (4,440 U.S. dollars) loan from a local bank two years ago, Zhao Yali would not have become the head of a bamboo cooperative in Gouya, an impoverished village in east China's Anhui Province.
"I never thought I could borrow money from a bank," Zhao said.
Gouya is famous for its bamboo products. Almost every villager is a skilled bamboo craftsperson but was unable to turn their skills into profit without money to buy raw materials and processing equipment. This trapped the village in a cycle of poverty for decades.
All that changed in late 2016 when Zhao managed to get a loan from a local bank.
The microloan, aimed at helping the poor develop their own businesses and increase incomes, is offered to registered disadvantaged households without requiring any guarantee or mortgage.
In Zhao's case, she could apply for a collateral-free loan from the bank at the benchmark interest rate on a three-year term, with an interest rate subsidy provided by government poverty alleviation funds.
That year, Zhao made a net profit of 5,000 yuan by selling bamboo brooms. In early 2018, she set up a cooperative, recruited residents from 18 households living under the poverty line and sold their products online. Now Zhao can earn about 20,000 yuan a year, while the workers can make about 100 yuan a day.
China has set 2020 the year to build a moderately prosperous society. To achieve the goal, China, the world's most populous country, needs to lift around 30 million poor residents out of poverty in the next three years, most of whom are in rural areas. Micro and small loans have become an important channel for these people to get financial support to find a way out of poverty.
Nearly 20 households in Gouya have used the loans as start-up funds to develop their bamboo-related businesses.
According to Jiang Hong, head of the provincial poverty alleviation office, Anhui has issued more than 27 billion yuan in micro and small loans to poverty alleviation programs by the end of June. The number of people living under the poverty line in the province has dropped from 6.8 million in 2012 to 1.2 million in 2017.
Similar financial support policies have been carried out in many other provinces including Jiangxi, Hunan, Henan, Hubei, Sichuan, and Ningxia. It has become an important measure for impoverished residents to increase income.
To help rural households get loans, a risk compensation fund system has also been established to direct more financial resources to the impoverished areas and people.
In Sichuan Province, such risk compensation funds are available in all 160 registered poor counties, totalling 3.4 billion yuan as of June this year.
Across the country, a total of 470 billion yuan of small loans have been issued to nearly 19 million registered poor households between late 2014 and May this year, according to Hong Tianyun, deputy director of the State Council Leading Group Office of Poverty Alleviation and Development.
"Poverty alleviation microloans have become an innovative way to reform China's rural financial system," Hong said.
"In the future, China will continue to promote inclusive finance in impoverished areas and try to solve the problems of poor people's loans," he said.