Ministries of finance and industry are finalizing details of the operation of a 15-billion-yuan fund created to support small businesses that face difficulties in loans and rising costs, said Zhu Hongren, an official with the Ministry of Industry and Information Technology, at a press conference in Beijing.

The central government has decided to earmark 15 billion yuan ($2.38 billion) to establish a development fund for SMEs, particularly focusing on newly-formed ones, reported Xinhua.

Zhu said SMEs began facing growing challenges of rising costs stemming from raw materials and labour since the fourth quarter of 2010. Moreover, weak overseas demand has also hurt some export-based companies.

To address these difficulties, the State Council, China's cabinet, last October decided to raise the tax threshold for collecting corporate value-added taxes and business taxes, and extending a policy to halve business income taxes by another four years.

The State Council last Wednesday called for more efforts to support the sound development of SMEs as they serve as a significant channel for creating jobs.

Zhu said that with concerted efforts, the nation's small and micro-sized businesses are unlikely to experience a massive wave of bankruptcies this year due to cash flow failure.