A Study Of Financing Problem Of Small And Medium Sized Companies In Henan

Henan is a large agricultural province and has big agricultural population. 140,000 small and medium-sized companies play an important role in several aspects. For example, they improve the development of rural area in Henan, increase the income of peasants and provide many work opportunities. However, these small and medium-sized companies tend to have more financing problems. Hence, it will be necessary to do some research on the financing problems of small and medium-sized companies in Henan province so that some feasible solutions and suggestions could be proposed to solve the financing problems of small and medium-sized companies.Based on the theory of financing sequence and life-cycle theory, questionnaire and mathematical statistics are used in this paper to investigate and analyze the financing situation of small and medium-sized companies in Henan province. From the analysis, it has been identified that the financing channel for small and medium-sized companies in Henan province is narrow. Financing source for small and medium-sized companies in Henan province is mainly from inside. If they need outside financial support, they would prefer the loan from bank. Unfortunately, the banks tend to refuse on the consideration of risk avoidance and cost. The small and medium-sized companies in Henan province have to look for high-interest-rate private funds. There are several factors which are responsible for the financing problems of small and medium-sized companies in Henan province. Firstly, there is lack of banks which only provide service to small and medium-sized companies. Secondly, guarantee system in our country is not sound. Last but the least, the companies are lack of credit awareness. Therefore, possible solutions to solve the financing problems of small and medium-sized companies in Henan province are put forward. On the one hand, the small and medium-sized companies in Henan province need to improve the management level, strengthen the credit awareness and build harmony relationship between companies and banks; on the other hand, government should offer proper policies support to small and medium-sized companies in Henan province and help to establish small and medium-sized private banks and multi-level capital market. As a result, the financing demand of small and medium-sized companies on the different stage could be met and the development of small and medium-sized companies will be promoted.