The Legal Problem Research Of Informal Financing

In recent years, with the rapid economic development in China, the number ofsmall and micro business is also increasing with a rapid pace, so that their demand forfunds is experiencing a greater gap. In this situation, relying on small loans fromChina’s official financial institutions solely can not meet their huge fund gap, and thesmall businesses have to go through other financing channels to ensure the supply offunds needed. Therefore private funds become the most important and convenientchannel for the small and micro business’s financing. Private financing is an existencebeyond the governmental financing with a variety forms. China is now lacking thematching laws and regulations to provide legal protection for this financing mode. Inthis paper, we mainly talk about the analyst of the existing law and regulations onprivate financing for small and micro business. Based on the analyzing of the relevantlaw and policies in the United States, Japan，Hong Kong and Taiwan, we can findsome legal strategies for private financing. In light of the private financing problemsfor small business, we should enact Act on Private Financing for Small Businesses,work out the complete credit system for the small and micro business’ privatefinancing, strengthen the supervision on private financing, and establish perfect andsystematic Small and Micro Business access and exit mechanisms for privatefinancing as soon as possible in order to escort the small businesses’ private financingin a legal means.