Abstract: On the basis of the observation of the real earnings rates and the debt repayment ability of China’s enterprises, considering the maintenance of the normal order of the borrowing and lending markets, this paper believes that a 20 percent level of interest rate or rate of return is a suitable cutoff point for the up limit, which is in line with Chin’s conditions. For this reason, we recommend that the primary interest rate of three times of the loan should be adopted to determine the up limit of annual rate of private borrowing and lending allowed by policy, this is relatively consistent with China’s current reality.

Key words: private borrowing and lending; primary interest rate; return on assets; debt repayment ability