Shanghai planning to revitalize domestic financial market (3)

Rather they help companies get loans and examine and evaluate the risks for banks. It is a win-win situation," Fan said.

Dai noted that many financial service intermediaries surveyed by the research team welcomed such proposals because the legal status would free them from "living in the dark".

Shanghai is home to more than 340,000 SMEs, accounting for a predominant share, or 96.7 percent, of all types of companies in the city. Small firms provide 54.6 percent of the city's job opportunities, according to government figures.

However, financing difficulties remain one of the top issues plaguing these firms. For example, Shanghai Yulong Biotech Ltd found it difficult to obtain loans due to lack of collateral, since its production base is in Shandong province.