The Industrial and Commercial Bank of China (ICBC), the nation's biggest commercial bank, said Tuesday it had granted 46.3 billion yuan (5.8 billion U.S. dollars) in loans to small firms in the first quarter this year.
The ICBC said the non-performing rate of loans to small businesses was below the average of all lending.
Some Chinese banks balk at extending loans to small businesses as they are commonly seen as credit risks, but the government is encouraging loans as small firms are contributing to economic growth.
The ICBC's outstanding loans to small firms stood at 102.3 billion yuan at the end of last month. These loans surged 70 percent in 2005.
The bank said in a statement its "key support" would be given for enterprises that boast quality products, advanced technologies, strong competitiveness in the market and sound prospects.
It would "strictly curb" projects not in line with government policies and industrial development.
China categorizes companies with annual sales of less than five million yuan as small enterprises.