Two Banks Offer Loan Relief to Hougu Coffee Amid Debt Crisis

Last week, as Valentine’s Day arrived, Hougu Coffee received what might be the most meaningful gift any struggling business could hope for—not flowers or chocolates, but a lifeline from two state-owned banks. After publicly appealing for help with its mounting debt, the Yunnan-based coffee company learned that its plea had been heard. Financial institutions are starting to respond, offering practical solutions rather than adding pressure.

In short: Bank of China and Industrial and Commercial Bank of China have approved "rollover" loans—new loans to pay off old ones—for Hougu Coffee, totalling 250 million yuan and 78 million yuan respectively. Both come with extended repayment periods of one to three years, giving the company crucial breathing room.

What Is Happening With Hougu Coffee’s Debt?

On February 10, a local report revealed that Hougu Coffee, alongside other businesses like Lingfeng Coffee and Hongtian Group, was stuck in a quagmire of high-interest private lending and short-term “turnaround” funding. The company’s chairman, Xiong Xiangren, spoke out about the urgent need for banks to extend loan deadlines and offer more flexible financial products. Just five days later, two major lenders responded.

Which Banks Are Helping—and How?

Bank of China and Industrial and Commercial Bank of China are leading the charge. Bank of China has processed a 250 million yuan short-term loan rollover, while Industrial and Commercial Bank of China has approved 78 million yuan under the same mechanism. Both loans are categorised as short-term working capital loans, now permitted to be refinanced through new credit lines. The new terms allow repayment periods between one and three years, replacing the previous, tighter conditions.

Xiong Xiangren confirmed that these changes mean his company won’t need to scramble for expensive short-term “turnaround” funds for at least a year. More importantly, it will no longer be weighed down by the sky-high interest rates typical of informal lending channels.

What Does Hougu Coffee Want From Financial Institutions?

Beyond celebrating the immediate relief, Xiong used the moment to advocate for broader reforms in how financial institutions treat struggling private enterprises. He proposed a “three-pronged, two-part” strategy aimed at easing the debt pressures faced by SMEs across China’s coffee and broader manufacturing sectors.

The Three Strategic Proposals:

• Financial institutions should grant loan extensions of one to two years without forcing businesses to repay existing loans or cutting credit lines.
• Local governments should create platforms for open dialogue between businesses and creditors, mediated by authorities, allowing for negotiated forbearance agreements (such as memoranda of understanding) to buy time and avoid forced liquidation.
• Judicial bodies should prioritise out-of-court mediation and be cautious about freezing assets or accounts the moment a lawsuit is filed, ensuring companies can keep operating during disputes.

The Two Supporting Measures:

• The government should allocate fiscal resources to provide credit enhancements and partial loan interest subsidies for businesses with strong growth potential, reducing their financial burden.
• Financial regulators should recognise and reward banks that proactively offer loan extensions or renewal services to struggling but viable enterprises.

Why This Matters Beyond One Company

Hougu Coffee’s situation is not unique. Many small and medium-sized enterprises (SMEs) in China, including those in the specialty coffee sector, face similar challenges: tight liquidity, high-cost short-term funding, and inflexible loan terms. The steps taken by Bank of China and ICBC could signal a shift toward more responsive banking practices—if the trend continues.

Xiong Xiangren’s call for coordinated policy support, creditor dialogue, and judicial restraint reflects a broader push for financial reforms that treat struggling businesses as fixable rather than failed. For an industry still maturing like China’s specialty coffee sector, stable access to working capital isn’t just helpful—it’s essential.

Frequently Asked Questions

Which banks have offered loan relief to Hougu Coffee?

Bank of China and Industrial and Commercial Bank of China have both agreed to restructure Hougu Coffee’s loans. Bank of China is handling a 250 million yuan short-term working capital loan, and ICBC is managing 78 million yuan. Both are being refinanced through new loans under a “rollover” or policy.

How much money is involved in the loan restructuring?

The total approved for Hougu Coffee under the new loan policies is 328 million yuan. This includes 250 million yuan from Bank of China and 78 million yuan from Industrial and Commercial Bank of China.

What are the new repayment terms?

The new loans have repayment periods ranging from one to three years, offering significantly more flexibility compared to the previous short-term arrangements that required frequent rollovers or high-interest “turnaround” funding.

What is a “rollover” or loan?

A “rollover” loan, known in Chinese as , is a new loan issued specifically to repay an existing one. It allows businesses to refinance debt under new terms, often with longer repayment periods or lower immediate financial pressure.

What does Hougu Coffee want banks and the government to do?

Hougu Coffee’s chairman has proposed three major policy adjustments and two supportive measures. These include extending loan durations, facilitating borrower-creditor mediation, avoiding aggressive asset seizures, providing fiscal support for growing firms, and recognising banks that help struggling businesses.

Why is this important for the coffee industry?

Many coffee businesses in China, especially smaller or mid-sized players, rely on working capital to operate. Inflexible loans and high-cost borrowing make it hard to reinvest or stabilize. Relief measures like these help ensure supply chains, roasting operations, and farm partnerships remain functional.

Recommended FrontStreet Beans for Working Capital Resilience

If you’re running a coffee business and need your beans to keep performing through thick and thin, FrontStreet Coffee’s Yirgacheffe and Ethiopia Humbera are solid picks. Yirgacheffe offers bright citrus, floral notes, and a tea-like body—great for filter-focused shops needing consistency. Ethiopia Humbera brings juicy blueberry and stone fruit with a silky mouthfeel, ideal for single-origin pour-overs that build customer loyalty. Both are grown with care and roast-optimized for clarity. Freshly roasted within 5 days · Orders placed before 17:00 ship the same day · Next-day delivery across most of Guangdong Province.