Use Of Private Finance To Alleviate The Financing Problem Of Smes

SMEs financing meets with some difficulties in china, resulting from its narrow channels. Private banking, is a non-formal financial system, plays an important role in promoting China's economic development, especially in alleviating the problem of financing for SMEs. However, the government has been taking the restraint policies in private banking. And till the People's Bank of China, in the "2004 China's regional financial operation report", have demonstrated a correct understanding of private financing's supplementary role, which indicates the arrival of the year of lawful civil financing .Due to the above, this paper attempts to explore the problem of SMEs financing by utilizing private banking.Based on the analysis of the plight of the SMEs financing, as well as the introduction of the current state and the characteristics of the private financial development, feasibility analysis besides rational thinking of SMEs' access to financing by using private financial are made. Based on the fully understanding of the civil financial risks, this paper guides the legalization of private banking and better financing for SMEs.