China Lending, a Chinese non-bank financial firm, has announced plans to dispose of Urumqi Fenghui Direct Lending (Feng Hui), a microloan business.

A variable interest entity of China Lending, Feng Hui focuses on serving the Xinjiang Uygur Autonomous Region with its loan facilitation services to micro, small and medium-sized enterprises.

The transaction will be conducted through China Lending subsidiary China Industrial Financial Holding Group, who struck an agreement with Zhejiang Zhongfeng Investment Management (Zhongfeng).

Under the agreement, Zhongfeng could pick a 100% equity stake in Feng Hui.

Zhongfeng also has the provision to assume control of and become the primary beneficiary of Feng Hui through a contract worth at least RMB15,000,000 ($2.1m).

China Lending co-founder and CEO Jingping Li calls the move “a decisive step” for driving growth.

Commenting on the development, Li stated: “The disposal of Feng Hui allows us to improve our liability position and convert our accounts receivables into cash.

“The disposal will further improve our liquidity while eliminating the majority of our debt and financing costs so that we can commit our resources to the development of other financing business lines with more promising prospects such as supply chain financing, asset management, and insurance facilitation.”

China Lending, set up in 2009, is based in Urumqi and Hangzhou.