Research On The Small And Medium Size Enterprises Financing

The important status of small and medium enterprises in the economic development is not in doubt. small and medium enterprises' development reflects our national economic system's level. In the environment of economic globalization, the development of small and medium enterprises in particular the financing issue is not only the difficulties but also opportunities.As the main body,small and medium enterprises in the market economy are most activist, and in many ways, have unparalleled importance. Their development has promoted the optimization of the industrial structure adjustment and upgrading of activation of market competition, promote economic growth, expand employment as the main channel to help farmers increase their income, the transfer of surplus rural labor, but also the major force of technological innovation. This section also simply analysised the characteristics of small and medium enterprises. Currently the ownership structure of small and medium enterprises has diversified; development of the non-state-owned enterprises is growing faster; labor-intensive is high and the development is imbalance. The important role of small and medium enterprises and characteristics determine that the importance of small and medium enterprises and their financing options.When small and medium enterprises financing to banks or capital markets, they all will face the problem of information asymmetry with capital providers. The user of enterprise' funds have more information than to the providers of capital, which is the so-called adverse selection and moral hazard. These factors will cause the financing of small and medium enterprises difficult, but also constrained the development of small and medium enterprises. Secondly, when the banking institutions provide capital to small and medium enterprises, there will be the issue of transactions-based lending. Transactions-based lending bases the borrowers' maintain oversight and the association to banks. The large banks of our country have more advantage than the small and medium banks in the issue of small and medium enterprises' loan.Structures of different sources of funding of small and medium enterprises are different, so do their mode of financing. There are two types of funding sources for Enterprises which are endogenous and exogenous, and corresponding, there are also two type mode of financing. Endogenous is the first choice, because the cost of Endogenous financing is far less than the exogenous financing. Exogenous-financing is important mode of access to finance for them, when they development to a certain size.Exogenous-financing is divided into direct financing and indirect financing .Equity financing and debt financing are the most common forms of direct financing. Indirect financing is primarily through the financing of the financial media, and one important way is lease financing. Different types of small and medium enterprises determine different ways to financing. In the actual situation, the financing of enterprises is the cross-cutting of endogenous and exogenous and integration of direct and indirect forms.The analysis of financing difficulties can be considered by the way of different financing modes. Mostly half of small and medium enterprises in our country lack of funds and are limited by self-accumulation, because the fiscal and taxation burden and internal distribution of profits in the seriously short-term tendency. As a mode of financing Exogenous-financing has been advocated, yet which is also faced with a major dilemma . Small and medium enterprises' direct financing situation is not well, and the cost of financing is far higher than the large enterprises. Although the board of SME is opened besides the main board in the securities market, the unreducing of standards still can not solute the problem of many small and medium enterprises listed issues. As a single method of direct financing, has increased the difficulty of indirect financing for enterprises. State-owned commercial banks loan most to large enterprises and large projects, and take marginalization policy to the majority of small and medium enterprises. Because competitive pressures of commercial banks is very large, and financial service is not close to the small and medium enterprises better, local financial institutions for small and medium enterprises' contribution is very small.Small and medium enterprises' financing difficulty is resulted from many reasons. Firstly, it is the problem of the small and medium enterprise itself. There exists a common phenomenon of information asymmetry in the process of financing; lack of the necessary financing knowledge and do not quite understand the financial institutions'loan approval procedures; the enterprise's own credibility is not high; at the same time their lack of capital and do not have a strong ability to repay due. Secondly, the structure of the capital market is not perfect, so it is very difficult for small and medium enterprises to do financial intermediationIn an effective way; there are also institutional barriers when banks and other financial institutions lending loans to small and medium enterprises, they only want to loan to state-owned enterprises; Banks not only can not participate in small and medium enterprises' daily business operation management, But also lack of impetus to provide financing services to small and medium enterprises. The most important thing is lack of small and medium financial institutions to match small and medium enterprises. Thirdly, the financing difficulty will becomes serious because of other reasons. Although ownership discrimination is not the the major obstacle currently, however, the impact still exists; the role of the government is still not really in place; organizations specifically providing financing services for small and medium enterprises is not sound; the state's policy has been tilt to support large enterprises; Credit Guarantee System and the imperfections of a social credit system is not sound, which is also one reason for SME financing difficulties.Small and medium enterprises' financing hardness is the urgent problem we need to solve. From their own point of view, they should further strengthen financing efforts of inner source. First, advance the reform of the system of promoting the modernization of small and medium enterprises; establish an enterprise system with self-accumulation capacity. Structural reform and the rule of law regulating the property rights system is particularly important for small and medium enterprises. Second, strengthen internal management, and establish a sound internal control system. Third, establish cost accounting and financial accounting analyzing system, and must vigorously pursue technological innovation, increase scientific and technological content. Financing from without is an important aspect of enterprise financing and increasing its proportion is good to the development of small and medium enterprises. First, optimize the market structure, and increase the proportion of direct financing of small and medium enterprises. The specific method is this: the company attaches importance to small and medium enterprises in the capital market system on the counter transactions; strengthening small and medium enterprises' equity financing; call for the way of debt collection to promote the combination of the voucher; to improve the form of risk investment and asset securitization. At the same time encourage private capital financing in the form of financing and pawn. First, recognize the advantages of private financing. Encourage private financing, to legitimize, strengthen its guidance and supervision to ensure their healthy development; private financing will be gradually introduced to other formal investment fields. Once again, increase the intensity of lease financing, and actively promote the mode of pawning financing to small and medium enterprises so that they can become the new financing channels.Change government's role in financing small and medium enterprises in time. First of all, continue to support the preferential taxation policies. Secondly, pay attention to the important role of interest subsidies. Third, increase small and medium enterprises' credit guarantee system. Finally, focus on the changes of government's economic management functions. Pay attention to the establishment and development of small and medium enterprises' credit guarantee institutions and can make it to serve small and medium enterprises' financing. Second, improve indirect financing channels, support small and medium-sized financial institutions for small and medium enterprises' financing; give interest subsidies to the financial institutions who loans to small and medium enterprises. At the same time encourage the establishment of mutual aid between enterprises financial organizations. First, the small and medium-sized financial institutions form the incentive mechanism different from the big financial institutions. Second, identify small and medium-sized financial institutions can guarantee a good development, and help small and medium enterprises financing appropriate level of interest rates. Third, because of the high risk premium loans expenditures they could compensate from the State in the form of interest. In the relative cost of financing on reasonable terms, apply for loans for small and medium enterprises will be able to gain normal development, but also with our market-oriented interest rate process, small and medium-sized financial institutions and small and medium enterprises could promote mutual and develop together.