The Channels And Strategic Choice Of Financing For The SMEs

With the further deepening of our nation's economic reform, the Small and Middle Enterprises (SMEs) in our country have developed rapidly and are playing a more and more important part in the national economy. However, for a long time, the sources from which the SMEs can get the capital for development can not match with the important role they played in the national economy, how to solve the problem that it's difficult for the SMEs to finance has been a very important issue which is concerned by the government, corporations and the scholars.Based on the comparative analysis, by the combination of theoretical and empirical research, this paper analyzes the internal and external financing environment, the alternative financing channels and their characteristics and the cost and risk of different financing methods, from the viewpoint of the SMEs' financing policy makers, trying to put forward some proposals for the SMEs'financing policy makers. Based on the analysis of growth history and the current situation of financing sources of our nation's SMEs, this paper argues that the inadequacy of the internal financing source and the difficulty of external financing source is the actual situation the SMEs face at present and that the reasons for that situation lies on two aspects: our nation's micro financing environment and the SMEs' own natures. It also points out that the current financing environment is improving gradually.According to the classification of traditional financing channels and the innovative financing channels, this paper lists six kinds of feasible financing channels for the SMEs at present, and analyzes the characteristics and the risk of different financing methods.According to the processes of enterprise's financial decision, this paper explains the financing motivation and the sequence of different sorts of financing methods for various enterprises. According to the principles of cost-minimization and value- maximization, the paper analyses quantitatively the cost of various kinds of financing methods with emphasis and discusses the effects of financing risks and capital structure on the financing cost.In one word, our nation's SMEs must fully realize the financing environment, improve the level of company credit situation and the quality of management and use the scientific processes so that the sensible financing decision for the corporation's prospect can be made.