In recent years, the chaos of “operation loans” on the mainland has been frequently reported. Despite continuous tightening of regulations, this phenomenon has not been eradicated. As we entered the second half of 2025, market data shows that such issues still pose hidden risks, with the risk of loan defaults accelerating as repayment deadlines approach.
A recent report by the “Daily Economic News” uncovered the ongoing chaos surrounding operation loans. Even if they are not engaged in actual business operations, individuals can secure operation loans through a series of falsifications such as obtaining licenses, fabricating business flows, and finding physical entities under the “packaging” by credit intermediaries.
An employee of a credit intermediary in a western region bluntly stated that the purpose of these actions is to deceive loans. They mentioned that customers in Shenzhen can qualify for operation loans if they have social security, housing funds, enterprise connections, salaries, property, cars, bank flows, business licenses, among other qualifications.
Similar credit institutions exist in various regions, frequently advertising their services on social platforms.
In practice, some borrowers use the “one-stop” services provided by intermediaries to register shell companies, fabricate business flows, and present themselves as individual businesses with operational qualifications to secure low-interest operation loans. These funds eventually flow into purposes such as buying down payments for houses, paying off mortgages, and real estate investments.
Official regulations were strengthened since 2021 to address this issue, but the chaos surrounding operation loans persists. Reports indicate that within the lobby of a credit intermediary in the western region marked with the words “one-stop service,” business remains brisk. Their “flow packaging scheme” even includes fake payroll disbursements, related-party transfers, and after-lending services like “fund supervision.”
Behind the lending assistance services lies the driving force of profits. Reports revealed that a credit intermediary in East China mentioned that borrowers going through the packaging process not only need to pay interest but also a service fee of around 6% and a deposit of up to 5000 yuan.
Furthermore, some small and medium-sized banks, particularly joint-stock banks and city commercial banks, have become the main lenders for arbitrage operations seeking to increase their lending volumes. Pressured by competition and performance evaluations, these banks are more likely to relax their risk control standards.
Operation loans were originally designed as financial tools to support the real economy and aid small and micro-enterprises. According to data from the Central Bank, in 2020, the balance of loans to small and micro-enterprises in China reached 38.7 trillion yuan, with a growth rate of 24.6%, significantly higher than the overall average loan growth rate. During that time, regulatory authorities directed banks to maintain interest rates for small and micro operation loans within the range of 3% to 4%, while personal mortgage rates ranged from 4.9% to 5.5%.
The interest rate difference incentivized some homebuyers to take risks by using operation loans in place of mortgage loans to save on interest expenses. Particularly during the hot housing market of 2020 to 2021, with strong demand for loans, the trend of “switching from mortgage to operation loans” rapidly spread, leading to arbitrage activities.
However, the credit chaos sparked by illicit arbitrage using “operation loans” is gradually transitioning from a profit-taking issue to financial institutions’ bad debt risks.
S&P Global Ratings forecast that by 2025, China’s non-performing loan ratio for small and micro-enterprise loans could rise to 9.4% to 10%.
In 2025, amid the restructuring and repayment period of a large amount of funds utilized for “operation loan arbitrage” between 2020 and 2022, failure to re-lend or secure bridge financing may lead to concentrated defaults and fund chain disruptions.
Bank non-performing loan data has started to reflect this risk. Ping An Bank disclosed that in 2024, the non-performing loan ratio for personal loans was 1.42%, an increase of 0.05 percentage points from the previous year; Postal Savings Bank had a ratio of 1.28%, up by 0.16 percentage points year-on-year. While the overall data remains manageable, on a macro level, this indicates that the “quality decline in retail assets” is transitioning from latent risk to real pressure.
Meanwhile, the “Beijing Business Daily” reports that in 2025, there is a massive scale of banks selling off non-performing personal operational loan assets. Zhongyuan Bank listed a transfer of 192 million yuan of personal loans, starting at only 9.7 million yuan, discounted to nearly 0.5. Bank of Jiangsu announced four phases of transferring non-performing personal loans amounting to 1.812 billion yuan, with a starting price of only 78.6188 million yuan and a discount rate of about 4.3%.
These discount disposal actions not only signify banks proactively clearing asset risks but also indirectly confirm that the operational loan issues have accumulated into systemic pressures. The “Beijing Business Daily” revealed that so far, over a thousand financial institutions have opened accounts for transferring non-performing loan businesses.
For borrowers, using arbitrage with operation loans may seem profitable in the short term, but it carries significant hidden risks.
The “China Youth Daily” reported a story in 2023 where a person named Huang Bin used an operation loan to finance a house worth 16.5 million yuan in Binjiang District, Hangzhou. He borrowed 11.9 million yuan for a 10-year term, with annual interest payments before principal repayments, leading to a monthly installment of 35,700 yuan, saving more than half on interest compared to a mortgage. Although he successfully obtained the initial loan, he soon received a warning text message from the bank, reminding him that the funds could not be used for property purposes.
Chinese intermediaries guide homebuyers to navigate in regulatory blind spots, but on social platforms, there are many stories of hardships and struggles after transferring loans.
“At that time, it was stated that there would be no repayment for ten years, only to find out it was a ten-year credit with a review every three years, forcing to find other lenders to take over.”
Industry experts warn that one significant risk of converting mortgages into operational loans is the risk of “bridging” and “transferring” loans.
“Advice to everyone, if you can avoid bridge financing, do not engage in it.”
A platform user mentioned, “After getting bridge funding, it costs 0.6 points daily, borrowing for at least ten days, stamped numerous times, and all documents were taken away.”
Another major risk stems from bank withdrawal or policy changes. Borrowers failing to repay the principal in time not only face risks of losing credibility and service cutoffs but also risks violating criminal law due to falsifying business data.
Moreover, if applying for operation loans with falsified documents constitutes loan fraud, banks have the right to demand early repayment, and borrowers may face criminal liability.
Currently, the “operation loan chaos” has shifted from early arbitrage activities to financial system pressure sources. Its risks are transitioning from an individual level to transmitting to bank asset quality, forming a new chain of financial risks.