Research On The Problem Of Small & Micro-enterprises Financing

In the wake of economic development and social progress in China, small and micro businesses have been increasingly expanded. After over 30 years of reform and development, China's public economy has achieved significant growth, and so has non-public economy, particularly the growth of small and micro businesses. Small and micro businesses, which adjust operational mechanism by dint of its flexibility, play an irreplaceable role in various aspects, such as maintenance of market vitality, job increase, improvement of people's livelihood, and social stabilization. Therefore, the fast and favorable development of small and micro businesses is indispensable for the long-term and steady economic growth in China.China's small and micro businesses, which have increasingly expanded their scale in recent years, have been established in most areas of China. The tax revenue paid by small and micro businesses constitutes half of China's total tax revenue. The GNP and finished service products that small and micro businesses create take up 7/10 of China's GDP, and besides, small and micro businesses have offered 4/5 of job opportunities for China's employees. Thus, the development of small and micro businesses is of valuable significance to boosting economic growth and improving economic system in China. However, undeniably, along with the slow growth and gradual expansion of small and micro businesses in China, varieties of problems occur as well, with financing appearing as a most striking problem. Whether in developed countries or in developing countries, financing of small and micro businesses is a thorny problem. Thus, the financing of small and micro businesses is also a global issue. Despite having studied and analyzed this problem from various angles, many scholars still fail to work out a fundamental solution even until now. At present stage, world economy is suffering a decline, and China is also facing varieties of economic uncertainties. In such adverse eternal economic environment, large numbers of small and micro businesses are confronted with the difficulties in operation and profit making as well as the risks arising from capital chain rupture. As compared to large enterprises, small and micro businesses are characterized by small asset size, a low number of employees, renting of production equipment and workshop, and a small amount of fixed assets. As a result, it is difficult for them to gain credit funds and other financial support from the formal channels like banks and financial institutes. In the face of internal and external troubles, it is urgent for small and micro businesses to address the financing problems. Over recent years, China has been laying much emphasis on the development of small and micro businesses and relevant departments have successively promulgated various policies and measures to promote the rapid development of small and micro businesses and address their financing problem. However, the financial crisis in 2008 has directly deteriorated the financing environment of small and micro businesses, as a result of which small and micro businesses can only seek financial support from non-financial institutes due to their incapacity of getting a loan from banks in recent years. Nevertheless, the high interest rates and costs, plus the uncertain risks, have posed greater difficulties on financing of small and micro businesses. Meanwhile, due to the actual problems of small and micro businesses in China such as simple capital market, underdeveloped financial environment and unsound industrial organizations, it will be of great value to figure out a financing solution for China's small and micro businesses.