CNFinance Holdings Limited (NYSE: CNF) (“CNFinance” or the “Company) is a leading home equity loan service provider in China with established business infrastructure. CNFinance facilitates loans by connecting micro- and small-enterprise (“MSE”) owners with its funding partners. MSEs refers to both individual business owners and registered MSE’s with annual revenue of less than RMB20 million. With more than ten years of experience in the loan service industry, CNFinance has established a national network of 75 branches and sub-branches in over 40 cities in China. The extensive local knowledge and resources the Company has acquired while building its business infrastructure distinguish it from other market players.
CNFinance’s primary target borrower segment is MSE owners who own real properties in Tier 1 and Tier 2 cities in China. These MSE owners typically have quick cash flow turnover from their business operations with high demand for working capital. Their financing needs are often unpredictable, time-sensitive and frequent. The Company’s target borrowers are underserved by traditional financial institutions.
The Company aims to serve its target borrowers by facilitating home equity loans and providing tailored services. CNFinance’s standardized and integrated online and offline credit application and assessment process shortens the time of loan disbursement to as fast as 48 hours from submission of a qualified loan application with all necessary documentation, providing expeditious financing solutions to MSE owners. The Company typically facilitates home equity loans to MSE owners in the form of installment loans with a tenor ranging from one to eight years, assisting borrowers’ short-term and long-term business plannings. The loan products are secured by first or second lien interests on real properties. Depending on the value of the collateral and the creditworthiness of the borrower, the Company offers flexible loan principal typically ranging from RMB100,000 to RMB3,000,000.
CNFinance has a rigorous and robust risk management system. The Company’s risk mitigation mechanism is embedded in the design of its loan products, supported by an integrated online and offline process focusing on risks of both borrowers and collateral and further enhanced by effective post-loan management procedures. The loans CNFinance facilitates are primarily funded through a trust lending model with its trust company partners. The Company’s trust company partners are well-established with sufficient funding sources and have licenses to engage in lending business nationwide. This structure provides the Company with stable funding sources.