Analysis of SME financing difficulties

Abstract: The problem in getting loans has long been China's SMEs, resulting in the development of power is limited, less able to withstand market volatility, the financial crisis on the closure of many small and medium enterprises with difficult access to external financial support for this article will explore the small and medium enterprises status and causes of loans, and policy recommendations.

Keywords: SME Financing Bank

First, the status of SME loans

As the civil lending rates are too high, most of the financing needs of SMEs have to give priority to bank loans, but these most difficult to meet loan demand.

First, most difficult for SMEs to obtain loans from banks, banks are more inclined to credit funds to invest in large enterprises and projects. Secondly, the whole point of view, SMEs generally lack sufficient assets to accumulate, it is difficult to provide adequate collateral, leading to the access to credit funds often can not meet demand. Finally, the credit needs of small and medium enterprises have a "short-term, the amount is small, with a letter of urgent, frequent demand" feature, but banks tend to adopt a set of complex approval procedures, need to submit a number of information, approval of a long period, resulting in many short-term funding needs of SMEs are not met.


Second, analysis of the reasons for SME loans

1. Enterprises due to security is based on commercial bank credit and stable cash flow business premise, earnings instability is so small and medium banks' fear of credit, "the main reason, in addition, mortgage, guarantees the absence of the second source of repayment also lead to difficult to obtain loans.

(1), poor profitability and financial risks. Most of the small and medium enterprises engaged in low value-added processing and manufacturing, the industry's grasp of the market and weak, and some even a sunset industry, in addition, SMEs are often blind compression flow funds for investment, expansion, fluctuations in the market, it is easy to cash flow break, leading to greater risk.

(2) lack of effective security present, commercial banks, mainly in the way of collateral, collateral is generally small and medium enterprises can plant and land, leading to a smaller value as collateral can not get full credit. In addition, most SMEs in industry or industry chain in a subordinate position, coupled with the lack of credit awareness of individual enterprises, making it difficult to obtain a valid guarantee security.

(3) low management level, the SME is often conducted by individuals or small number of people management, many still in the stage behind the family management, so that the low level of corporate management, the banks lack of confidence in its future development.

(4) poor credit and many SMEs are experienced the chaos of the last century, the market order and credit environment, credit awareness is relatively poor, when the business is in crisis tend to delay or deny payment, even in the individual business owners There is no repayment repayment capability.


2 banks
(1) The bank's credit policy for SMEs negative. Many bank's credit system is designed for medium-sized enterprises, the small asset size, sales revenue instability, lack of collateral of small and medium enterprises and high thresholds.

(2) for small and medium enterprises' credit discrimination. "As the SMEs in the past and have accumulated a lot of credit business of non-performing assets, many commercial banks for SMEs in cooperation with skepticism, tightened credit to SMEs, This exacerbated the difficulties in SME lending.

(3) historical issues. Part of the small and medium enterprises by the former state-owned enterprises or collective enterprises from its predecessor in the bank have an adverse credit history even if the business is now in good condition, a strong willingness on the new loan, the bank Credit can not be in accordance with the provisions of their loans.


3 external environmental factors
(1) undue interference in local government departments. Some local governments in the process of closing loans play a clear negative influence, such as to maintain social stability on the grounds, to intervene and clear the loan collection litigation work, leading to collateral and guarantees can not be execution, the court did not accept credit or even litigation.

(2) the lack of guarantee institutions for SMEs. The first is the lack of governmental security agencies, has not been established in many parts of guarantee institutions for SMEs, there is less private capital to enter the security industry, which led to lack of collateral is difficult for SMEs to obtain external security , thus affecting the loan.

(3) lack of collateral market is currently trading market in China also lack of collateral, resulting in less liquid collateral, banks are often forced to sell at a price well below its value for sale Links to free download http : / / www.hi138.com Third, the idea of ​​small business loans difficult to solve

From the above analysis we can see, the difficult problem of SME loans by a number of areas, caused by multiple factors, to solve this problem, the efforts of relevant parties.


1 small and medium enterprises should enhance their profitability. Enterprises should strengthen the management level, to change the one-man or family management, focusing on risk management, rational use of funds, pay more attention to expanding in the investment cash flow stability, enhance credit awareness, to recognize In today's market environment, the policy of vulnerability or Piandai by drilling operations have not feasible, to avoid the early growth of the small amount of bad credit affect future long-term development

2. The Government should build a good credit environment in addition to their own efforts, the Government should build a good credit environment.

(1) determined to stop inappropriate behavior. The functions of relevant government departments is reflected in the economy, should be to establish and maintain a fair and reasonable market order, in addition to normal market forces should avoid direct intervention in the economy outside, especially the court should enforce the law , while strengthening the supervision of the court.

(2) the establishment of guarantee institutions for SMEs. SMEs in the creation of Economic value also led to a large number of local employment, the Government in determining whether the establishment of guarantee institutions for SMEs, the security agencies should not simply consider the Economic benefits, but also should consider additional Economic and social benefits, companies can take financial + security deposit established way of guarantee institutions for SMEs.

(3) collateral flow to establish a sound market established by the government, led by banks, guarantee institutions for SMEs in all sectors of society and the collateral flow channels, to facilitate the realization of collateral.


3 bank improvements
SME loans are interwoven by a variety of complex factors, in addition to proposed corporate enhance their profitability and the government to establish credit facilities, banks in the face of the current main form their own credit system should be adjusted, within a reasonable incentive and restraint mechanisms .

(1) eliminate the "credit discrimination." As the high cost of credit for SMEs, low income, high risk characteristics, coupled with some of the complex historical factors, bank lending to SMEs are not enthusiastic, but most should see the current SME credit awareness is gradually strengthened, and its ability to withstand higher interest rates, banks can realize benefits through appropriate pricing of risk coverage.

(2) Account Manager using reasonable incentive and restraint mechanisms. In general, client manager operating income of small business loans than large loans, but it takes time and effort with very large loans, benefits, costs, risks do not match, so customers are not enthusiastic about their manager recommended that the current incentive and restraint mechanisms to be adjusted, you can increase the incentives to maintain strict constraints on the basis of the accountability system.


References:
[1] Lin, Yong-jun. The development of small and medium financial institutions and SME financing Economic Research, 2001 (1)
[2] Cao Fengqi. To establish and improve the SME credit guarantee system fields. Financial Research, 2001 (5)
[3] Nai wake up the SME Credit Guarantee [M], Tianjin: Nankai University Press, 2004 Links to free download http://www.hi138.com