A lack of credit records are one of the biggest challenges that banks face when they offer loans to small and medium-sized enterprises, industry experts said at a forum on Friday.

The average life of a SME is around 2.5 years, so banks have difficulties checking the companies' loan risks, said Chen Cheng, deputy head of the SME department of Baoshang Bank.

"In addition to mortgages, we pay close attention to the enterprises' cash flow, including past, existing and future cash flow," said Chen.

The bank's risks prevention scheme, Chen said, centers on monitoring the cash flow of SMEs. The bank decides on the amount and model of the loans based on the analysis and expectations of the companies' cash flow.

According to Chen, Baoshang Bank's loans to SMEs range from 1 million yuan ($158,730) to 10 million yuan, with most under 5 million yuan.

Industry data said that the proportion of loans given to SMEs among all the loans has increased from 21 percent four years ago to 30 percent.