Small Micro Enterprise Financing Difficult Problem Research In Henan Province

By December 2014, there were altogether 398,000 small and micro enterprise in Henan Province. They accounted for 50% of GDP of Henan Province and undertook 80% of new employment of Henan Province, which contributed an important force to the economic and social development of Henan Province. But meanwhile, only in the first half of 2014, the loans of the banking industry in Henan Province for small and micro enterprise only accounted for about 28% of all loans remaining sum. According to the assessment of the Finance Office of Henan Province, the comprehensive financing cost of small and micro enterprise in Henan Province is more than 15%, and it is difficult to conduct the financing through regular channels, as a result, a large number of enterprises have to carry out private financing, even illegal fund-raising, which further pushed up the cost of financing. How to promote the continuous flourishing development of small and micro enterprise is one of the most important tasks currently.This paper carries out a study on the financing issue of small and micro enterprise in Henan Province, and through the ways of organizing the private enterprises as well as the small, medium and micro enterprise in Henan Province to carry out discussion surveys, site visits, questionnaires, it finds out the status and problems of the financing of small and micro enterprise in Henan Province. And this paper also respectively analyzes and discusses the reasons of some aspects, for example, the small and micro enterprise are treated unfairly on financing, and the cost of financing is remaining high, it is difficult to get loans from banks, it is difficult to set up small financial institutions, and the financial instruments are not well used, and so on. Finally, this paper proposes general ideas and specific strategies for optimizing the financing issue of small and medium enterprise in Henan. The study in this paper believes that the difficulties for small and micro enterprise in Henan Province to carry out financings are caused by the composition of multiple factors.(1) The constraints of financial system, In China, the banking industry adheres to the principle of “gross control, position control, risk control”, which allows banks to develop and operate under the influence of national policies, together with the multiple causes of the bad abutment of financial innovation, the economic characteristics of Henan, and the inadequate implementation of the financial preferential measure, which cause the difficulties for small and micro enterprise to carry out financing.(2)The financial structure is unbalanced. The financial development of Henan Province lags behind, and the banking innovation is not enough. The credit structures and regulatory frameworks for small and micro enterprise need to be improved, and the reason of inadequate cooperation between financial institutions and banks is another major cause of the difficulties for small and micro enterprise to carry out financing.(3)The financing environment is poor. The financing channels are limited, the reasons of increased difficulties, the decline of effective credit needs, the serious barriers of industry sector, poor legal environment that restrict the financing of small and micro business.(4)The own reasons of small and micro enterprise, the limitations of the ideas of small and micro enterprise owners, the own shortcomings of small and micro enterprise, the characteristics of the needs of small and micro enterprise loans also increase the difficulties of financing.