A Study On The Financing Difficulties Of Small And Medium - Sized Technological Enterprises From The Perspective Of Investment And Credit

Nowadays, China’s economic falls into a shift and transition period, technological innovation has become a major driving force of economic transformation, on which small & medium-sized technology-based enterprise plays an increasingly important role. But in the process of growth, companies are often faced with the predicament of insufficient funds.However, both central and local government lay stress on the financial support for small & mid-sized technology-based enterprise, and have enacted many administrative rules to ease the financing problem. But most of the small & medium-sized enterprises of science and technology still can’t find the effective ways to solve the loan-applying tension and the high cost of funds. The underlying reasons is the deadly shortcoming of current financing model, as follows:Firstly, information asymmetry between the small & medium-sized enterprises of science and technology and financial institutions is common. Because the operation and management system of those companies is not sound, it is difficult to make financial statements in accordance with required specification, and because of the high risk of technology research, light asset operation, they are unable to conform to the requirements of financial institutions. Considering the high risk, commercial banks is unwilling to lend. In addition, small & medium-sized enterprise need more complex information audit and many procedures when applying for loans.Secondly, the transaction cost of loaning is too high. Based on the proper risk/reward ratio, the interest of small and medium-sized enterprises reaches more than 15%, and private lending rate reaches 60%-80% per year.Thirdly, current system does not allow commercial banks to invest enterprises directly, so commercial banks can’t share the growing earnings of small and medium-sized enterprises through equity investment gains.Under this circumstance, the shortcomings of current financing model need to solve urgently, or innovate the basic financing model. Investments and loans linkage refers that commercial bank sign an agreement with Venture Capital/Private Equity (PE/VC) determining the cooperation relations. After company assessment and equity investment of the investment institutions, commercial banks loan to these enterprise or PE/VC to form the link of equity financing and bank credit, so as to support the development of small & medium-sized technology-base enterprises.This paper sets up a specific model of this "investments and loans linkage" mechanism. It can be described as:firstly, the park, government and venture capital jointly funded park platform development fund; secondly, commercial banks support certain proportion of loans to the park platform development fund and unified by the fund for equity investment to qualified enterprises in the park; at last, enterprises pay fixed and risk income as return. In addition, the paper designs several investment method based on the developing period of high-tech enterprises, and construct evaluation mechanism, guarantee mechanism, firewall isolation mechanism, risk warning mechanism of park platform against risk. Afterwards suggestions are put forward from three aspect of the government, bank and park to perfect the mechanism.This "investments and loans linkage" mechanism realize a tripartite win-win situation between the commercial bank, hi-tech park, small and mid-sized technology-based enterprise, as well as cater to the government policy. All in all, it is a helpful attempt within the current policy.