Relationship Between SMEs’ Debt Financing Structure And Growth

SMEs are important parts in the economy of our country. They play an irreplaceable role on the expanding employment upgrading of technology、promoting economic development. In other words, their development level will affect our domestic economy directly. Since the reform and open policy, the speed of SMEs development has being fast than ever. They have achieved a great progress in quantity, scale and industrial aspect. Till now, SMEs occupy99%of the total number of enterprises, contribute more than60%of GDP, make tax contribution for about50%and offer more than80%of jobs. SMEs are also the main force of innovation,they create66%of the invention patent and82%of new products. Therefore, SMEs have become key part for the society stable and economy prosperous. However, due to themselves actual strength and external conditions, the development of SMEs present different tendencies. SMEs tend to have poor ability to resist risk and imperfect organization management weaknesses, it results in short life and high mortality. According to the statistics,only13%of SMEs life are more than10years. Therefore, in order to promote the better development of SMEs, we should make the SMEs have a high growth. Fast growing SMEs have a strong potent, they have products which have a vast potential of development, continuous growing of profit and scale, flexible mechanism and integrated managing system, from this point of view they have already prepared to be large enterprises. The growth of enterprise not only presents their sustainable develop capability, but also offers valuable reference information for future strategies.High growth of enterprises in the process of development require a lot of financial support,different financing channel and different period bring the different financing cost and risks, the shareholders and creditors of SMEs play the different roles in promoting the development of enterprises.Both academia and industry have focused on the financing structure. Smooth financing of SMEs is the fundamental guarantee of its bigger and stronger, A reasonable financing structure not only reduce the,financing cost,but also avoid financial risk effectively,and make SMEs in a strong position in the intense market competition.After years of development, financial theory about debt financing have become mature, The original research was MM theory which is about debt financing. As the loose of related conditions, the balance theory, signal transmission theory and the agency theory begun to emerge. Therefore, the researches on debt financing had become popular in the west countries. Scholars had come up with various results depend on these theories. Compared with west countries, these studies in China started late, hence the related profound literature is rare, and the demonstration has not come to an end result. On the other hand, along with the constant deepening of economic system reform in our country, the capital market becomes maturer and perfecter, in this process, the study of equity financing is relatively abundant, and the debt financing research is relatively few, the research scope is small too.Some scholars of China’s researches prefer to argue the optimizing capital structure and its effect on enterprise value by comparing debt financing and stock financing. However, the researches about the relation between debt financing structure and enterprise growth are very few. Moreover, the current studies are focus on the A-share listed companies while ignore the SMEs. SMEs play an essential role in the development of domestic economy. They have their unique characteristics differ from other large scale enterprise. Unclear information, high business risk when compared with the large scale enterprises makes a significant agency cost and leads to some limitation in financing. These all make SMEs apply different strategy in financing structure. Furthermore,the scholars’researches about debt financing structure are limited in the debt level and debt maturity structure,not argue about the relations between short debt resources and enterprise growth for further. According to the sources of debt of corporate, debt financing can be divided into financial institutions debt financing, enterprise debt financing and market debt financing. Different sources have different impact on the performance of the enterprise and growth.So it is necessary to study the relationship between them in a more in-depth study. Last, Most domestic scholars use some single variables to measure the enterprise’ growth when doing some researches which cannot fully show the companies’real growth situation. This is the main reason why previous scholars cannot come up with a consistent conclusion. As a result, building a rational growth index system, defining explained variable and explaining variable scientifically is the key to do the empirical researches. This paper focusing on SMEs and combine related theories address associated hypotheses, apply regression analysis to survey the relation between debt level、debt maturity、debt resource with the enterprise growth based on the date of677small and medium enterprise board listed company. The results show that the SMEs growth has a positive correlation with the debt level,and has a negative correlation with the debt maturity as well as the debt source.Then put forward the corresponding suggestions for the problems found in the process of researching.hope to offer some references for SMEs when they choose the debt financing decisions.