On The Plight Of The Financing Of Smes And Countermeasures

Being difficult in capital raising for small and midsize enterprises(SME) is aworldwide problem. The purposes of this article is to discuss the causes of SME capitalshortages and suggest ways for settling them. By applying methodologies of logicreasoning, comparative analysis and investigational researches, the article makesresearches in the 3 major fields, that is, the status, causes and international comparisonsof capital raising difficulties of SME, aiming at providing ideas for further improving thecapital raising environment for SME. The article proves that SME play a very important role in promoting prosperity ofour country's economy, in increasing opportunities of employment, in flourishing themarket as well as in maintaining the stability of the whole society.It also demonstrates that China is a country where banking credit is the mainapproach of capital raising and banking credit has become the main source of the fundfor SME's normal operations.By analyzing the internal and external causes of SME fund raising difficulties, wecan see that the external cause lies at lacking a complete SME financing system while theinternal cause lies at the incompleteness of the enterprise management architecture. It isconcluded that the financing difficulty situation of SME in China is formed by theco-effects of multiple elements.The article suggests that to settle the problem of SME financing difficulties, a complexsystematic project as well as the co-efforts of the central government and various departments oflocal authorities are needed, and a comprehensive support system that embodies diversity,business orientation and integration is absolutely necessary. At the same time it is necessary tochange the viewpoints of financing institutes, cultivate and protect private financing market, andactively expand indirect financing channels under the principle of establishing a standardized andcommercialized financing market. Secondly, we must build a multi-level capital market and widenthe direct financing channel to give more support to SME. Finally, enterprise must enhance themanagement structure, increase the transparency of the finance status and exert its own potentialto the greatest extent in seeking fund support.