SMEs in the international financial crisis, the financing bottleneck

Abstract: As the socialist market Economic system and financial markets gradually improve the rapid Development of SMEs in the Development of more and more into public focus. While it is the Development of SMEs has made considerable progress, but there are still many problems Small problems to be solved, including financing the Development of SMEs has become a bottleneck. through the analysis of the international financial crisis, financing difficulties of SMEs, and proposes countermeasures to solve the financing bottleneck.

Keywords: SMEs; financing; bottleneck

The Development of SMEs in China has made considerable progress, but financing remains a bottleneck restricting the development of SMEs. How to develop the financing needed to adapt to enterprise development strategies, financing options, control the scale of financing, as well as the use of a variety of financing opportunities, conditions, cost and risk, long-term problems for SMEs financing.


First, the financing of the international status of the financial crisis

Of SMEs in the international financial turmoil sweeping through the world suffered a severe winter, the Ministry of Industry and Information Technology, Ministry of Finance jointly issued a <"On the good development of SMEs in 2009, the first batch of special funds to inform the work project application>>, started ahead of special funds for SME development project application, the aim is to focus on supporting the "Top Ten industrial restructuring and revitalization plan" with the SME-related projects, employment projects to expand entrepreneurship and SME credit guarantee business subsidy programs. We must attach importance to short-term financing problems of SMEs, but also the use of a comprehensive way, building its long-term effective mechanism to solve the financing problems of SMEs.

1. Textile Industry financing in the financial crisis situation. Difficulty in getting loans in the textile Industry average profit margin is low, less than 3%, with very few listed companies and the local support of the backbone enterprises, 90% of the textile business loans is difficult, they tight in the capital, mainly by big business lending. textile loan interest only a few points, and real estate even in a downturn there are a few points, the banks tend to the latter course.

2. Software and Internet Industry financing in the financial crisis situation. Software Industry, many fist-type products, it is because there is no good financing and development environment, and finally aborted. Software industry is essentially a "by the human brain to make money , whereas the brain is not reliable, "the bank will lose money if there are problems. Therefore, software companies in getting loans bottleneck is the lack of assets. the Internet industry, good business do not need loans, because there is risk investment; poor and loans less money, the banks that will burn, will not make money. Internet access to venture capital enterprises in the former, only by individuals or shareholders hardy support, support to the venture capital or private stationed in the day.

3. Loans, guarantees and venture capital industry in the status of the financial crisis. As to the bank loan difficulties, some companies only through underground banks or pawn loan shark. CCTV survey done in Shaanxi, to emergency, the SME loan shark is common. usurious monthly interest rate of 5%, borrow up to 10 thousand a year income 600,000 yuan also. not only high interest, and many have gangster background, the risk is too high. The more the trough in the industry, the more the risk of loans large. the bank itself is also the enterprise, from self-interest, will strictly control the trade credit. in the financial crisis into the bottom of the metallurgical, textile, automotive, trade and other industries, industry-wide losses are likely to occur, who would not do it rashly lending.

Security solutions to SME financing industry is an important part. But under the impact of the global financial crisis, many small business failure, the security company suffered heavy losses. Nantong City Banking sector under investigation, in January 2008 to September, Nantong City 17 worked with banks to sponsor compensatory phenomenon occurs, the cumulative amount of compensation 6 500 million, an increase of 2.2 times. now venture capital funds, lack of social capital is not, but could not find a suitable investment. For the high-tech investment Technology enterprises, the state provides 70% of investment tax credit. Jiangsu has hundreds of thousands of small and medium enterprises, but through science and Technology departments that the more than 1 000 high-tech SMEs, and venture capital firms to more than 200 available corporate venture capital company little choice.


Second, the reasons for SME financing

1. SME credit in poor condition. The overall credibility of SMEs in the lower, mainly in: (1) corporate financial management confusion, distortion of accounting Information, data, lack of authenticity, objectivity, pervasive accounting fraud virtual account, and become the industry's "hidden rules." (2) the existence of product structure and the organizational structure of irrationality, such as low-level redundant construction and other issues. (3) generally low quality of employees, to be improved. low level of business management, technical equipment backward, and product quality is uneven. (4) SME unclear property rights, inadequate corporate governance, internal control system disorder. Due to the above four aspects, a direct result of banks to lose confidence in most SMEs, the more of its loan conditions and more demanding, with the cumbersome procedures of late, the bank's credit will become increasingly difficult.

2. SME financing costs. For commercial banks, small and medium small amount of each loan request, but the loan approval procedures and large corporate loans are roughly the same steps, if the number of loans to SME customers increased, the inevitable will lead to bank loans increased unit operating costs, and banks will naturally choose to maximize profits for SMEs "credit crunch." loans to SMEs because of high operating costs, so financial institutions, the interest rate on such loans is normally higher priced . But the central bank's benchmark interest rate commercial banks and provides a small range of floating constraints, resulting in formal and informal financial markets, larger spreads, the bank reduced the mortgage initiative, indirectly increased the cost of financing.

3. The lack of financing for SMEs policy bank. In our current system of banking organizations, is still the lack of specialized financial services for SMEs policy bank, although now with our small and medium commercial banks such as rural credit cooperatives, city commercial banks, but most of them did not get the right financing policy, can not meet the needs of SME loans. In addition, a number of small and medium financial institutions from its inception, the system can not be abstracted from the state-owned enterprises out of their management level together with not high, the development capability, a direct result of the weakening of financial support to SMEs. The financial system reform can not be quickly over time, "reborn", and those inherited from a planned economy the problem has not been the answer has been that situation: If you do not reform the financial system, then the problem will continue to inhibit the small and medium banks, Private Banks.

4. Credit and guarantee reasons. Credit guarantee system is incomplete. Credit guarantee system, designed mainly to solve the problem of collateral for SMEs, but the investigation point of view, this design results in the actual operation is not ideal, The main reasons are: (1) guarantees the company the strength is not strong, the bank will not trust their own security companies and increase the risk of loans. (2) The guarantee fee is too high resulting in many small and medium enterprises "discouraged." (3) Bank security risk and responsibility between the companies do not have a standard of conduct, resulting in a small security company risk, the risk is relatively large bank loans, has been the banks and guarantee the company's cooperation.

5. The traditional vision led to discriminatory lending policies. Lending discrimination since the eyes are there in China, private small and medium enterprises are often ignored, due to large state-owned enterprises and national key construction projects of interest and collateral, a direct result of state-owned banks loan "priority." This is a direct result of the SME lending rate actually paid higher than the state-owned enterprises. the Government must bear the ultimate state-owned enterprises unlimited debt obligations, which means the state-owned enterprises enjoy the soft constraints of credit conditions, Bank assumes no means too much responsibility and risk, credit risk would be relatively low. The private sector is outside the system, enterprises can not enjoy this special commitment to security assistance, once the debt problem, the bank for the purposes of accountability, lenders will be held accountable. Therefore, even though the four major state-owned banks is the objective of choice for SME financing and the main channel, but compared with the same choice of state-owned enterprises and channel extrusion, enabling SMEs financing "struggling."
6. The stock and bond markets with high barriers. For small and medium enterprises, through the issuance of stocks and bonds to finance it is feasible. China <<Law>> states: Limited registered capital of not less than RMB 500 million, listed companies Total shareholders of not less than RMB 3000 million public offering of shares to the company more than 25% of the total number of shares, public offering of shares in the ratio of 10% or more, etc., these hard conditions directly to cancel the eligibility of SMEs, small and medium strangled companies are trying to raise funds through the capital market the idea. China <<Law>> also provides for limited liability companies to issue bonds of its net assets of not less than 6000 yuan, net assets of not less than Co 3 000 million, and companies need to have secured strong, does not allow corporate private placements, this series of conditions also limit the issuance of bonds financing SMEs through space.

7. The second board market is not conducive to traditional SME financing. The second board market is mainly to provide financing for the growth of SMEs in the service, most of which target is a private high-tech companies. Of small and medium enterprises (especially the Pearl River Delta and Zhejiang SMEs) Most of the traditional labor-intensive enterprises, characterized by low Technology, not suitable for financing in the second board market. In addition, the high cost of financing has also become a bottleneck of inhibition. from the transaction cost point of view, the Second Board Listing Although lower than the threshold of the motherboard market, but higher than the market assessment of costs, along with small scale, low level of profitability and other factors, led to the high cost of listing and financing.

8. The social credit system is not perfect. The credit of more than a question, and even the credit problems of Chinese citizens has just begun. The credit problems on the one hand the shortage of credit from business groups, on the other countries lack of credit the rigid system of supervision and regulations. Although a few cities have come in the forefront of the country, with a corresponding credit monitoring and evaluation system, such as Beijing, Shenzhen, corporate loans and guarantees has interconnection Information. However, these systems than in other countries sound social credit system there is a big defect, regional, special Information channels for a single, narrow coverage and other factors inhibiting the establishment of our credit system. Therefore, the maturity of the credit system needs a long process.

9. Inadequate government support for SMEs. Reform and opening up, the government has consistently biased towards the development of state-owned enterprises, which led to neglect the development of SMEs, making the development of SMEs in serious difficulties. Since the introduction of policies to encourage SME development is also a lack systematic and comprehensive implementation of the implementation of policies in place, the government still focus on state-owned enterprises, resulting in the development of SMEs "worse." Although China has issued a <<Law >>,<< Enterprise Protection Act "> etc. These Laws also do some small and medium specification, but in practice the lack of specific methods, can not really address the development of SMEs in the face of some specific issues.


Third, learn from foreign experience and the financing of SMEs

1. Diversification of foreign financing of SMEs. Foreign sources of funds for SMEs, including self-financing, direct financing and indirect financing, government support and funding, mainly self-financed owners own funds, borrowed from relatives and friends funds, personal investment funds; venture capital firms into the capital, the enterprise credit, SME lending mutual aid agencies and some social fund loans.

SMEs in each country according to the analysis of capital structure, they can be divided into the following three types: one is held by owners of their own funds mainly focus on direct financing channels for the type of liberalism, such as the U.S. and the UK. Another is the value of family finance, the role of indirect financing type of collectivism, such as Italy and France. The third type is involved in between, such as Germany, Japan and South Korea. Overall, the foreign capital structure of SMEs based mainly on self-financing. in which more than 60% self-financing to the United States had the largest number of SMEs, such as France, Italy and other small and medium enterprises, self-financing ratio was lower than in the U.S., but also reached more than 50%. In self-financing, the largest proportion of funds held by the owners themselves; followed by relatives and friends to borrow money, then come the direct financing and indirect financing.

2. Foreign specialized SME financing. Overall, the Western countries of specialized financial services for SMEs mainly in the following three trends: First, the financing of long term assets for short-term lending financial institutions and the increasing differentiation of commercial banks . Second, investment funds and industrial funds to gradually separate. The third is for large enterprises as the main customers of large financial institutions and small and medium enterprises as the main customers for small financial institutions division. small financial institutions, professional, independent of the direct result of establishment of small and medium financial institutions. These financing for small and medium sized financial institutions are completely privately owned, managed, and its capital is held by private self-financing. as long as the SMEs registered with it and will get the relevant licenses Under the Government's guarantee can provide financing services to SMEs.

3. The foreign policy of the Government to support SME financing. SME financing is an important channel for government funding. Comprehensive national situation, the government support funds account for about 10% of total assets, due to the national situation and tradition is different, so a little more in some countries, some countries a little less. but financial assistance to SMEs in the country much the same way, including: tax incentives, financial subsidies, loan assistance, venture capital and open up channels of direct financing and so on.

First, the tax incentives. The way financial assistance, tax incentives is the most direct and most conducive to capital accumulation and development of enterprises. In Western countries, the tax value of large enterprises to increase the value of enterprise funds is about 50% -60% SMEs is relatively better, but also added value accounted for 30% less for capital for SMEs is relatively large burden. In order to promote the development of SMEs, reducing the tax burden, countries have reformed their tax policy, are: lower tax rates, tax relief, improve the tax threshold and increase the depreciation rate of fixed assets. Through this policy, the majority of small and medium enterprises may be exempt from the tax value of approximately more than half its level from the share of total taxes value added 30% to 15%. This tax-free financing for the development of SMEs is essential.

Second, the financial subsidies. Financial subsidies to encourage small and medium enterprises to absorb the main job is to promote SMEs in technological progress and to encourage SMEs to export more. The main types of subsidies are: employment subsidies, Research and development subsidies, export subsidies. General Government's financial subsidies are not the true sense of play to solve this problem, the key is to guide. French financial subsidies in Western countries in the system is the most complete best. France, the main approach of tax incentives are: (1) new business section 80% a year may be exempt from income tax, this approach can largely solve the initial operation of new enterprises, the shortage of funds; (2) If in the old industrial areas or the construction of national key development of SMEs can enjoy the 3-year exemption from local taxes , corporation tax and income tax, 50% after three years to enjoy the tax benefits. French financial subsidies to the main practices are: (1) for each additional job opportunities for SMEs will be able to get 2-4 million francs of government financial subsidies. (2) 6 additional employees within three years, SMEs can obtain subsidies from the local territorial management departments 1.2-1.5 million francs. (3) more than 30 people within three years to increase access to government subsidies for SMEs 1-2 million francs per person (4). SMEs employ an apprentice can get every government subsidies 12,000 francs (5) subsidies for innovative SMEs to fund their R & D 25% (6) for the employment of young and unmarried single women must be given to small and medium enterprises are also financial subsidies (7) For energy-related SMEs, save a ton of oil available for every 400 francs reward.

Third, the loan assistance. Loan assistance is for the export-oriented SMEs, the most important government incentives. For technical innovation of SMEs and start-up is significant. The United States and Japan, financial assistance loan assistance is mainly dominated, which mainly the United States-led government loan guarantees. and the Japanese government established a specialized mainly serve small and medium enterprises as the leading financial institutions to provide low-interest loans. U.S. Bureau of the existence of the significance of SMEs is to provide government guarantees to induce major U.S. financial institutions to provide loans. Specifically: (1) U.S. Bureau of the $ 750,000 small and medium enterprises as a standard, 75 million U.S. dollars of loans, the Government provides 75% of the total security (2) 75 or more 80% of the total loan guarantee and up to 20 years of age. (3) Minorities and women founded by SMEs, the Government's strategy for its implementation is to provide the guarantee 80% of the total. (4) required for some quick loans for a total of 50% of SMEs security (5) for export and small and medium enterprises engaged in international trade must be given to security policy.

Japanese government set up special financial institutions are mainly small and medium enterprises Finance Corporation, the National Finance Corporation, the central treasury portfolio of Commerce and Industry, Environmental Health Finance Corporation, Okinawa Development Finance Corporation and other revitalization. They can provide interest rates for SMEs than the market other financial institutions, short-interest loans with low interest rates of 2-3%, and the time into long-term loans. In addition, the Japanese government has also set up similar to the U.S. Bureau of the SME sector, providing guarantees for SME financing services.

Fourth, venture capital. Western Europe and the United States most of the risk of funds created by the private sector, the Government does not interfere, and to provide policy support; Japan risk fund established by the state agencies. In all countries, the U.S. private investment in the number of risk the largest, and most of them to provide funds for the high-tech SMEs .2005 receive a total of over 70,000 small businesses a total of 1 100 billion dollars of venture funds, venture capital industry, to vigorously promote the development of SMEs in the United States. United Kingdom established by more than 100 venture capital in small and medium composed of a small finance company dedicated Venture Capital Association, in order to provide a large number of high-tech venture capital assistance.


Fourth, to solve the financing problem of SMEs in China Suggestions

Financing problem of SMEs is a long way to go to work, it is necessary to focus on its short-term difficulties, but also a macro built using an integrated means of an effective mechanism for the long term.

1. Foster good credit awareness, and strive to foster the image of honesty and trustworthiness. With the maturity of the socialist market economy and development, the faithless will meet the market out of business. SMEs to succeed in a competitive market based and obtain the support of financial institutions, continue to grow and develop, we must adhere to from beginning to end the principle of honesty and trustworthiness, on a regular basis to the relevant sectors of society to provide comprehensive, accurate financial Information to ensure the repayment of bank loans on schedule shown with step by step in the community establish a trustworthy on heavy good image performance.

Links to Research Papers Download http://www.hi138.com 2. Improve enterprise management level, the establishment of sound financial management system. SMEs to quickly establish a market economy management model needs to absorb professional management and technical personnel. to strengthen the financial management system, a financial budget and final accounts system. with a master of financial professionals, improve the financial management system, establish a sound internal control system and to enhance the use of funds, working capital and financial accounting aspects of management.

3. Meet the needs of SMEs, continually expand the indirect financing channels. Bank credit is still the first choice for SME financing, and the government restructuring of commercial bank strategy, should support the development of SMEs, the first place continue to broaden the channels of indirect financing to commercial banks as soon as possible really break the country, the state-owned banks, state-owned enterprises "trinity" of the distorted structure of financial resources, improve the SME credit department dedicated to establish a specific set of credit for SME development management system; amount for SMEs over a broad, diversified , diversity and other characteristics, an appropriate extension of loan approval authority, streamline the approval process, shortening the processing cycle, improve the efficiency of examination and approval, improve, and improve credit incentive and restraint mechanisms. restructuring of commercial bank strategy, the state also introduced the corresponding loans for SMEs The benchmark interest rate and interest rate.

China's financial system are the four main state-owned commercial banks, the credit share of the total share of more than 75%, due to limited financial resources of local small and medium financial institutions can hardly bear the responsibility to support the development of many small and medium enterprises, so the solution of state-owned commercial banks in financing small and medium enterprises is still the key issue. In the state-owned commercial banks to provide funds to play the main channel, we must also continue to develop and expand the existing small and medium financial institutions and private capital to continue to play an advantage. the Government can run well through the existing small and medium financial bodies corporate restructuring, accelerate the restructuring of rural credit cooperatives, norms, conversion, payment difficulties on the part of the city being small and medium financial institutions and capital verification, allow and encourage the introduction of private capital and foreign financial capital shares of small and medium financial institutions and other measures, development and growth of small and medium financial institutions of power, through legislation to encourage the development of private capital. In addition, the government through the establishment of guarantee funds for SMEs, to address the problem of SME loans and support the development of SMEs.

4. Support the development of SMEs, expand direct financing. Established for small and medium characteristics capital market system, speed up the launch of the GEM, accelerating the development of SMEs, to encourage SMEs to issue equity financing, bond financing for the collection. First, To speed up the establishment and improvement of services in SMEs, the direct financing of the Growth Enterprise Market In 2009 May 1, issued by China Securities Regulatory Commission <<initial public offering and listing on the GEM Interim Measures>> formally implemented, means that in our country has been brewing for 10 years, officially opened the GEM, the GEM financing channels to open is no doubt to the general board missed the domestic market for financing small and medium enterprises, to bring low-cost direct financing of the Gospel. to allow small and medium enterprises operating in good condition, in particular, the high-tech companies for the shares issued to the public, even when conditions are ripe, high-tech small and medium appropriate to relax the conditions listed on the stock, there must be feasible. Second, the further development of SMEs in the bond market. SMEs because of their asset size and scale of operation restrictions, are often difficult to find an independent corporate bond financing. a collection of small and medium enterprises through the issuance of bonds, can solve this problem. SMEs is a collection of bonds by an institution as the lead person, along with several enterprises apply for the issuance of bonds, is a kind of corporate debt, which is commonly known as "bundling issue bonds." SMEs are a collection of bonds directly expand its unique and effective form of direct financing channels for SMEs to solve the existing financing of SMEs in China difficult problem of high costs. Third, the promotion of private investment to establish a risk-based capital system, and improve access to venture capital and exit mechanisms to encourage private investment company and the workers formed mutual investment funds. Fourth, the Government's financial contribution the main establishment of SME Development Fund, technical innovation fund, mainly for small business loan interest subsidies, venture financing, Technology innovation support and export subsidies. Fifth, the innovation of financial instruments used for small and medium enterprises, to facilitate short-term funding facility for SMEs.

5. Improve the policy and institution building, the reasonable control of SME financing risks.

First, the Government should formulate policies more conducive to SME financing, SME lending further clarify the Bank's accountability system, to take on non-performing rate of loans to total control agencies, greatly weakening the accountability system, client manager, not by small and medium enterprises Responsibility for life credit investigation system; bank lending to SMEs can reduce business tax rates, increase the proportion of loss reserves; to encourage banks to take loans to SMEs accounted for separately, a separate assessment, the enthusiasm inspired account manager; encourage the banks the right to appropriate delegation of authority and approval ; the judiciary to dispose of a separate SME development bank collateral judicial procedures and practices, streamline processes, improve operability, the borrower through the legal means to reduce the behavior of floating collateral, strict actions against evasion of bank debts, to create a good provide legal protection for the credit environment; prohibiting commercial banks to a record of the borrowers default loans.

Second, the Government should strengthen the guarantees the company's management. Financial institutions, regulatory authorities should further develop security company regulatory measures, the security company as an important regulatory target, develop detailed rules and regulations to support the guarantee stable operation and sustainable development in government departments. nature of the guarantees the Government should increase its capital strength, financial guarantee company can compensate for the government to provide some kind of compensation.

Third, vigorously promote the construction of SME credit. The Government should improve service, create an environment for SME development so as to provide support, and vigorously promote the concept of credit, rebuild social credit order, and optimize social credit environment. One of the key is to strengthen the integrity system, give full play to the comprehensive management functions, will be the business of SMEs in the different agencies information, product information, financial information, transaction information, breach of contract records together, the number of products to improve public information and transparency, monitoring the progressive realization of SME credit socialization.

6. Vigorously support and promote the development of private lending institutions. Private lending as a useful and necessary formal financial supplement, to a certain extent, ease the financial difficulties of SMEs to enhance their Economic performance and adaptability of self-adjustment, and to some extent, to fill the supply of formal financial reluctant to get involved, or the formation of inadequate funding gap. standard and orderly development of private lending is conducive to our long break from the formal financial institutions such as commercial banks monopolize the market structure, and promote multi-level credit market the formation and development. However, the private lending outside the formal financial divorced, there are hidden transactions, monitoring absence, the legal status of uncertainty, risk difficult to control, and easy to breed illegal financing, triad-related behavior, money laundering and other issues, need to develop appropriate regulations to guide and regulate. from February 20, 2008 the Bank proposed to introduce <<lending Ordinance>> for private lending to provide a better legal environment, to local governments to promote and regulate the timely submission of private lending programs, goal is to revitalize the large number of idle private capital to further expand the financing channels to ease the financial pressure on small and medium enterprises, a more comprehensive and effective implementation of the state civil oversight and regulation of financial activities. of private lending institutions just in its infancy, a strict system regulations for private lending organizations, strengthening supervision and review of necessary and essential. Government regulations, while the Research system, establish a monitoring and testing organizations targeted by sound, sound, scientific system of statistical indicators for monitoring of private lending funds to invest in the necessary supervision and guidance, but can also draw on successful practices abroad, such as indicators of good credit within a few years, operating a legitimate private lending organizations, or trust the system through the banking system to give a certain guarantee policy.

In short, our small and medium enterprises in the national economy with a pivotal position, especially in this financial turmoil, China's SMEs face financial chain tension, the adverse situation of falling demand, do everything possible to ensure the production, security of employment for the community harmony and stability have made important contributions. Therefore, in order to promote the Health of SMEs in China, the rapid development of a fundamental solution to the problem of financing, building long-term mechanism for delay.


References:
[1] Ting Li, Xin Xun. To solve the problem of financing of SMEs think [J]. Finance and Economy, 2008 (11).

[2] Ren Wu. On the issue of SME financing Thoughts [J]. Taxation, financing, 2008 (3).

[3] Gang. The problem of financing of small and medium enterprises [J]. Foreign Trade, 2008 (12).

[4] Yang Guoqing, Li Dajun, Chen Xi fruit. Hack SME financing: international comparison [J]. The financial aspect, 2008 (12).

[5] Wang Ning. Financing of small and medium enterprises [J]. Business Economics, 2008 (12).

[6] Wu Qiong. Learn from American and Japanese financing of SME service system [J]. Local government Research, 2008 (5).

Links to Research Papers Download http://www.hi138.com