Wenzhou’s financing management regulation, the first local legislation covering private lending, will take effect on March 1. It has been called a breakthrough to monitor and regulate private financing activities, as well as a model for the nation. The regulation is intended to be a formal solution to the financing problems of small and medium-sized enterprises (SMEs) by providing a more regulated system in Wenzhou. The city was selected to conduct trials of financial reforms at the end of March 2012. Regulators and lawmakers recognized the need to regulate the collapsing private-financing system after widespread loan defaults by factory owners and investors led to a crisis. Operating guidelines are expected to be issued in conjunction with the legislation that will clarify definitions and specify the procedures for dedicated bond issues and fundraising. Loans exceeding CNY3 million or with more than 30 lenders, must be recorded at the local financing management bureau within 15 days after the deal is signed. The city has opened 11 registration centers for this purpose. The nation’s first private lending credit database will also be launched formally on March 1. “The direct beneficiaries will be SMEs experiencing financial problems, as they can use more methods to raise money legally,” said Zhou Dewen, Chairman of the Wenzhou SME Development Association.