Small Loan Companies And Sme Financing Research

Whether the small and medium enterprises (SMEs) in the country can develop healthily is an important thing related to the whole macro-economics for the country. The financing problems of SME has always been an important factor constraining their development all the time. Shanghai is the economic center of China, SMEs are playing more and more important role in creating social wealth, increasing national revenue, absorbing workforce, making market economy actively and so on. Therefore, in order to accelerate the overall development of economy in Shanghai, one of the most important things is to solve the financing problems of SMEs.This paper selected SMEs in Shanghai Pudong New Area as the object of study. Through the analysis of survey data , we can find that indirect financing problem exists in 11 towns of Shanghai Pudong New Area.The reason was information asymmetry caused by adverse selection and moral hazard, which leading to commercial banks can not provide credit rationing to SMEs effectively. Of course, there are big problems in themselves, such as lack of capacity of mortgage and guarantee, poor credit of financial, high rates of closures and default, which will make commercial banks tending to lend to large enterprises. So, it is difficult for SMEs to obtain corresponding loans.For the fact that SMEs can hardly obtain loans from commercial banks, The following conclusions can be obtained in this paper through the analysis of development of Small loan companies and three related models: In order to maximize profits, large commercial banks must choose large enterprises to provide financing service rather than SMEs, which has caused SMEs financing difficulties for many years. However, the emergence of Small loan companies can solve the financing problem for SMEs timely. It can achieve maximize profits for both Small loan companies and SMEs. It not only can solve the financing problems of SMEs, but also can get a better development for their own. Therefore, we should develop and improve the Small loan companies, which is a new way to solve the financing problems of SMEs . So, the paper analyzes the the role of Small loan companies in solving financing problems of SMEs in Shanghai's Pudong New Area.At the same time, Because of the Small loan companies'own nature , the economic environment and the ralated regulatory policy and other reasons, Small loan companies also have problems when solving SMEs'financing problems, including the problems caused byinterest rate caps and interest rate volatility, the problems of target customer credit, the source of funding and operational risks. This paper analyzed all the problems one by one, and then proposed related countermeasures and suggestions. Finally, through the study and research of international successful models of small loans, the paper proposed growth prospects and direction of reform for Small loan companies.