Online lenders in China are extending lifelines to small businesses in Hubei to help them get back on their feet as normalcy returns to the original epicentre of the coronavirus outbreak after over two months of lockdown.

MYbank, an internet-only lender backed by e-commerce giant Alibaba Group Holding, on Wednesday waived first-month interest for micro merchants applying for loans in Wuhan, the capital of the central Chinese province and reduced the interest rate by a fifth for business owners in other parts of the province. Alibaba owns the South China Morning Post.

"We are committed to supporting SMEs [small and medium-sized enterprises] and will continue to provide leading digital technology solutions to support the recovery of small businesses and help them prepare for the future," said Simon Hu, chief executive of Ant Financial Services, which is the largest shareholder of MYbank and an affiliate of Alibaba.

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This came the same day authorities ended the lockdown of Wuhan and allowed residents to leave the city for the first time after 76 days, during which period over 50,000 people were infected and 2,571 died from the virus that causes the Covid-19 respiratory disease. China has largely brought the epidemic under control after more than two months of battling it, which at one point brought business and economic activities to a near standstill.

MYbank is an offshoot of Alibaba Group Holding. Photo: Reuters alt=MYbank is an offshoot of Alibaba Group Holding. Photo: Reuters

Late last month, online lender WeBank, owned by social media and online gaming juggernaut Tencent Holdings, also announced a series of measures to relieve financial burdens on clients in Hubei. The bank waived as much as 10.6 million yuan (US$1.5 million) worth of interest and penalties owed by Wuhan-based clients who had defaulted on their loans due to the impact of the Covid-19 outbreak.

The initiatives were a timely response to China's financial regulators' call for banks to be more lenient on small businesses and grant them greater access to credit in this time of difficulty. The China Banking and Insurance Regulatory Commission said last week it aims to lower the funding cost of small companies in Hubei by at least 1 percentage point.

Qiu Mengyi, a 26-year-old owner of a nail salon in Wuhan, was hopeful about the future of her shop after taking out an interest-free loan of 200,000 yuan (US$28,310) from MYbank.

"The shop could last another six months because of the loan," said Qiu. "Without the loan, I probably would have given up already."

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Qiu's 128 square metre (1,380 sq ft) shop in a normally busy shopping complex has racked up 100,000 yuan of losses in terms of rent and employees' salary since it was shut in late January. She was making a profit of 150,000 yuan a month before the outbreak escalated, resulting in the extended lockdown that lasted 76 days.

The young entrepreneur reopened the nail salon on Thursday, but business is still at half the level before the outbreak. Citizens still need various health certificates to get out of their homes, which is proving to be a drag on business, she said.

"Wuhan is a populous city, and I'm pretty confident the business could return to the level before the outbreak eventually, when the disease is contained completely," she said.

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