Sme Financing Problem

The Research Implication of the PaperBefore the year 1997 the principal direction in the industrial policies is on the development of enterprises of large scales. Only after the South-East Asia financial crisis have occurred the situation changed, because in the South-East financial crisis the economic systems mainly composed of business of small and medium size are counteracted to the sudden shock, the economists in the fields show more attention to the functions of the small and medium sized business in the market economy. Afterwards, eight years' continuous economic growth in the United States declared the arrival of the era of neo-economy. The important position of small and medium sized business in the modern economy has been confirmed due to their decisive functions in the neo-economy. As the small scale, large quantities and elastic modes of operations, small and medium sized business are very advantageous in the market competition. Small and medium sized business shall be able to promote economic development steadily, absorb a lot of labor force and put new stimulus in the market, which is the key point for small and medium sized business to have its position in the development in the national economy. Since the gradual recognition to the implications for small and medium sized business in the process of economic development, the financing issues for small and medium sized business has also been paid high attention to. It has become a difficult problem that is correlative with the stable economic development in our country as to how to solve the difficulties in financing by small and medium sized business and promote continuous development of small and medium sized business. This paper studies the financing problem for small and medium sized business with the purpose to put forward suggestions to the development of small and medium sized business.Classification of the ObjectivesFirst, in the study of issue of financing for small and medium sized business, we must classify the definition of small and medium business as small and medium sized business is not a absolute concept. In different countries and regions, and even at different periods of the same country, the standards for classifying small and medium sized business are different, both from the perspectives of qualitative and quantitative. The paper discusses the classification from the competitiveness of business, and argues that small and medium sized business are disadvantageous enterprises in the market which from the definition demonstrates the necessity for the support of small and medium sized business. For convenience in discussion, this paper defines as business which are independently owned and managed and do not take a dominant role in the industry.Research Methods and IdeasThis paper, which uses both normative and positive analysis, studies financing problem as to put forward some practical measures in financing. Introduction poses problem and then analyzed it from theory and practice. Finally, the paper proposes a set of counterproductive policies and measures to the financing in small and medium sized business.The Main PointsSmall and medium sized business refers to the business that is weak in competition and is not taking dominant role in the industry, which is to be supported by the governmental policies.The development of small and medium sized business has been neglected for long time in our country. The step in study in theory and practice are quite late. Meanwhile, financing problem has become a bottleneck in the further development of small and medium sized business in our country. Therefore, it is of great importance for the theoretical studies and practice on the financing problem for small and medium sized business.The modes of financing can be divided into two types as internal financing and external financing, whilst external financing is divided into direct financing and indirect financing. In the beginning of the establishment, internal financing has decisive function.