Can companies borrow from each other, and can companies borrow from each other

Non-financial enterprises can borrow from each other, but there must be a contract. The interest cannot be higher than four times the interest on the bank loan for the same period. More than four times is considered usury, which is not supported by the law.

However, the part that exceeds the interest of the bank loan in the same period shall be excluded from the pre-tax deduction by the enterprise that pays the interest in the final income tax settlement.

Article 61 of the People's Bank of China's "General Principles for Loans" clearly stipulates: "Administrative departments at all levels, enterprises and institutions, supply and marketing cooperatives and other cooperative economic organizations, rural cooperative associations and other cooperative associations shall not engage in financial business such as deposits and loans." Enterprises shall not violate state regulations to handle loans or disguised loan financing business".

Therefore, it is illegal for companies to borrow from each other.

The law prohibits borrowing between businesses.

But if you want to borrow, there is still a way to operate, and Shishi operates like this:

For example, Company A wants to borrow funds from Company B.

First of all, AB conducts a fake sale, for example, A's equipment, buildings, land, etc. can be transferred to B by signing an agreement, and B will pay A's funds.

After the funds of A can be turned over, enterprise A will buy back the subject matter that was originally transferred to B, and of course pay the funds to B, which is equivalent to repayment.

Of course, there are certain risks associated with such operations.

Legal analysis: Enterprises can borrow from each other, but only for production and business needs.

Legal basis: Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases

Article 1 The term "private lending" as used in these Provisions refers to the act of financing between natural persons, legal persons and unincorporated organizations. These Provisions do not apply to disputes arising from the issuance of loans and other related financial services of financial institutions and their branches established with the approval of the financial regulatory authorities to engage in loan business.

Article 10: Except in the circumstances provided for in Articles 146, 153, and 154 of the Civil Code and Article 13 of these Provisions, where the parties claim that the private lending contract is valid, the people's court shall support the private lending contracts concluded between legal persons, between Zheng Kaichang unincorporated organizations, and between Sun Sheng and each other for the purpose of production and business operations.

Article 11: Where legal persons or unincorporated organizations raise funds from employees in the form of loans within the unit for the production or business operations of that unit, and there are no circumstances provided for in articles 144, 146, 153, or 154 of the Civil Code, or article 13 of these Provisions, and the parties claim that the private lending contract is valid, the people's court shall support it.

Legal analysis: Enterprises are not allowed to borrow from each other.

Legal basis: "General Principles of Loans of the People's Bank" Article 61 Administrative departments at all levels, enterprises and institutions, supply and marketing cooperatives and other cooperative economic organizations, rural cooperative associations and other cooperative associations may operate financial businesses such as deposits and loans without drafting. Enterprises shall not violate the provisions of the state to handle loans or disguised loans and financing business.

The backbone of the enterprise can borrow from each other.

The judicial interpretation of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases stipulates that the validity of private lending contracts signed between enterprises for the purpose of production and business shall be determined.

According to Article 1 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases, the term "private lending" as used in these Provisions refers to the act of financing between natural persons, legal persons, and other organizations and among themselves. Therefore, it is legal for companies to borrow from each other.