Solution For Financing Difficulty Of SMEs

Since the beginning of the twenty-first century, SMEs in China has entered a period of rapid development, turning to be the most important part in the social and economic development of our country. As getting more and more attention in our country and society, SMEs becomes to exposure more and more problems and face larger and larger obstacles. Among all the problems and obstacles, the problem of financing is generally considered to be the biggest bottleneck in its development. Especially after the2008financial crisis, due to the shortage of funds and the breaking of capital chain, many SMEs from different areas and different industries have started hovering at the edge of bankruptcy, seriously affecting the smooth running of the macroeconomic. How to ease the financing difficulty of SMEs turns out to be the problem needed to be solved immediately.In theory, the channels of corporate financing includes direct financing and indirect financing. On the one hand, the level of development of China’s financial market is not high, and the direct financing method which mainly contains equity financing and debt financing is not yet widely used by SMEs; on the other hand, the commercial bank is in a completely monopoly position in China’s financial markets, and the indirect financing through commercial bank is the main mode of financing for SMEs in China. Therefore, though China’s financial practice, the problem of financing for SMEs can be converted to be the problem in getting loans.The reason why SMEs cannot get the loans from the bank is the serious information asymmetry between bank and enterprises, and leads the bank reduce loans for SMEs for the principle of prudence considerations. Information asymmetry is mainly caused by the following:First, the level of credit of SMEs is not high in China, and the management of SMEs is very poor, and the financial statements lack credibility; Second, China’s commercial banks focus on the services of large enterprises, and is accustomed to the traditional mode of credit, and lacks a more suitable method to determine the credit risk of SMEs; Finally, the credit system and the guarantee system in china are not perfect, and the external environment is not fit for SMEs getting loans from bank. Based on the above content, the paper creatively proposes solutions in solving the information asymmetry between banks and enterprises, containing improving loan concept, constructing the mechanism of circulation of information, and building the guarantee system. Especially, this three options include three different aspects:the internal part of the bank, exchange part of the bank’s internal and external, and the external part of bank. According describing the different solutions completely, together with the risk analysis and feasibility analysis, at last, we can get a comprehensive and structured program in solving the problem of financing for SMEs, which is for commercial banks and other market participants to learn from.