For the first time: China considers offering property developers unsecured loans 

China is likely to allow banks to provide unsecured short-term loans to eligible real estate developers for the first time in an effort to ease the real estate crisis that is hurting the growth of the world’s second-largest economy, according to Bloomberg.

“As part of a package of new measures to support the real estate industry, regulators are considering allowing banks to provide so-called working capital loans to some developers,” people familiar with the matter told “Bloomberg.”

Unlike other types of loans available to those companies, which typically required land or assets as collateral, the new financing facilities did not require collateral and would be available to cover day-to-day operating expenses, which might free up capital that could be used to repay debts.

“Officials are also considering a mechanism that allows a lender to take the lead in supporting a struggling developer by coordinating with other creditors on financing schemes,” according to “Bloomberg.”

“The implementation would require regulators to exempt bankers from liability for potential bad loans, given the significant risks involved,” people familiar with the matter told “Bloomberg,” noting that negotiations were still ongoing and subject to change.