On The Relationship Between Private Equity Funds And The Financing Of Small And Medium-sized Enterprises In China

As an important part of the socialist market economy, the small and medium-sized enterprises can active the economy and solve the problem of employment. But for a long time, the financing problem of these enterprises can not be solved effectively; it has been the main bottleneck of the development of small and medium-sized enterprises. Facts have proved that, the indirect financing, in which the banks play a main role, can not solve the financing problem completely. Also, the reluctance of the banks to lend will make this problem worse when the financial crisis takes place. The experience of china and other countries has shown that, as a direct financing tool, the private equity funds can solve this problem, so the analysis on the relationship between PE and small and medium-sized enterprises will be of a important significance for the financing problem.Under a comprehensive use of contemporary economics, the paper first analyzes the problem in the direct financing from six prospects,they are loan approval,interest rate risk pricing,accounting system,restraint and incentive system,training system and breach notification system. Second, analyzes the superiority from the PE in helping the labor-intensive and technology-intensive small and medium-sized enterprises, the feature of the PE investment and the development status of PE in china. Last, the paper analyzes the three main problems on PE in china and makes targeted recommendations like supporting the mainland PE institutes,consummating the exit channel and the legal infrastructure of PE investment.