Small Business Financing Problem

As a vigorous economic group, Small enterprises are important part of our national economy as an important factor for the economic development in recent 30 years. By the end of 2007, the number of the small enterprise has been more than 90% of the total number of the enterprises. The value of the final products and services they create has taken up about 60% of the GDP in China. While the taxes paid by them has added up to 50% of our country's total taxes. Besides, the small enterprise has provided opportunities for more than 75% of the employed in suburban areas. Now in our country, 60% of the patent, 75% of the technology innovation and 8% of the development of new products are created by the small enterprise. The small enterprises have become the pioneer for the technology innovation and a basis for the development of employment. The small enterprises have turned to the impulse for the transform of China's economic mechanism because they embrace flexible mechanisms and ability to adapt to the market. However, the development of the small enterprise face a series of problem, the most serious one among which is the financing problem. The loans for the small enterprise are less than 20% of the total bank loans .The financing problem Has became a bottleneck in the growth of the small enterprise.At the same time, as the acceleration of the opening up in financial business and the diversity of the financing channels of big enterprises. We encounter with the over mobility and the progressively reducement of the bank profits space, thus making the banks shoulder of the suppression caused by the fact that major clients return the loans together. The banks traditional business shrinks constantly. So that they are in the great need for a new exploited market. In this circumstance the huge financing demand of the small enterprise has provided new development opportunities for the financial institutions in the banking industry. Therefore the banks have to improve the financial services for the small enterprise and meet the financing demands of the small enterprise in order to maintain their steady development. Actually, the essay will focus on how to find out a basic and adoptable small enterprise steadily and efficiently in a long term.This essay treats the relevant parts of the financing for the small enterprise as a whole and then studies it for two different ports of view. For the first point, it studies the definition characteristics and growth patterns of the small enterprise and then analyze the current financing situation our country's small enterprise encounter with. For the second point, it explores the counter measures to the financing problem in the face of the small enterprise according to the international experiences.This essay defines the scope of the small enterprise and analyses the financing junk existing in our country in terms of substantial evidence .The junk exists not only for the common factors shared by the small enterprise all over world. Such as lack in the products for mortgage low credit and administrate unstablity but also for the shortness of public services for the financing of the small enterprise,the shortness of the reform of the banking mechanisms of the small enterprise and the shortness of the innovations in laws and polices to regulate the banks.The essay sums up to the experiences of the developed countries and relevant financial institutions in solving the financing problem the small enterprise and pave the way for establishing and improving our country's public service system for the financing of small enterprise. It includes improve the laws financial polices, taxing policies and administrate expense polices for the financing of the small enterprise plus its credit mortgage system, social credit system, credit evaluation system and soon. Financial innovation is the foundation for breaking down the obstacles in the financing of the small enterprise. The financing of the small enterprise have some characteristics quire different from those of the big and medium enterprise. However, many banks which operate the loans for the small enterprise always refuse to innovate their inner systems, instead, they ask for the government allowances or the supports from outside. As a result the betray of the conditions concerned with loans becomes more and more serious, while the allowances and supports can't solve such a serious problems at all. So, if we want to solve the financing problem of the small enterprise efficiently, we must put emphasize on the innovations in the relevant fields such as verdict and loan systems of the banks, look for a systematic resolution and work out a commercialized and sustainable financing demands and characteristics. The essay point out that we must added innovations to these fields such as banking system, verdict, and loan technology, verdict and loan products, capital markets and public financing.Because of the university and complexity of the financial difficulties of the small enterprise as well as their effect in the social economy, establishing dispirited lows, rules and policies to regulate the banks and enforcing some encounter measures to help the small enterprise will play a positive role in solving these problems. The essay summarizes the important innovative measures China Banking Regulatory Commission has taken into practice in the loan businesses for the small enterprise.In a word, solving the financing problems of the enterprise is a systematic project. Which is difficult to be finished by simply relying on one aspect .For these reasons, we must look at this problem systematically. Only if we find out an integral way to solve the problems in the financing of the small enterprise. We will braise for a road with Chinese characterizes for the financing of the small enterprise.