About: Financing Difficulties of Small and Medium-sized Enterprises and Countermeasures

In a sense, the activity of small and medium-sized enterprises marks the vitality of a country or region's market economy. However, the development of small and medium-sized enterprises in China faces many obstacles, especially in fund raising. In many areas, the number of SMEs that can really get long-term loans is very limited. Of course, compared with large enterprises, it is common for small and medium-sized enterprises to have difficulty in financing. Only by solving some artificial and unreasonable obstacles that restrict the financing of small and medium-sized enterprises can we help them improve their competitiveness and long-term development.

Through a period of social practice, I found the following problems in SME financing.

(A) the enterprise's own reasons

1, low management level. Although China's small and medium-sized enterprises have developed rapidly in recent years, they still give people the impression of "poor, scattered and chaotic". On the one hand, the internal management system of small and medium-sized enterprises is not perfect, the product production technology is backward and the quality level is low, which forms a vicious circle of insufficient funds, poor operating performance, poor financing credit and poor financing credit. Many small and medium-sized enterprises have a high debt ratio, and they are extremely short of operating liquidity and development investment funds, which makes it impossible to carry out normal business and investment transformation. They can change their credit status by increasing profits in order to obtain various external credit financing. On the other hand, there are many small and medium-sized enterprises, involving many industries, and the phenomenon of multi-head account opening is more common, so it is difficult for the financial sector to grasp the real situation. And with the expansion of enterprise scale, the management level of production, marketing, finance and personnel of small and medium-sized enterprises can't keep up with the pace of enterprise development, which makes it difficult for enterprises to adapt to market competition and enter the track of benign development.

2. SME executives lack modern financing awareness. Mainly reflected in: (1) Most small and medium-sized enterprises lack modern debt management awareness and corresponding management methods, and have limited understanding of the relationship between corporate debt and business profits, so they cannot look at the role of corporate debt financing from a development perspective. (2) The management concept of most enterprise executives has not changed, and modern enterprises are not regarded as a process of capital value appreciation and cash flow maximization from the perspective of profit and cash flow, so the position of funds in production cannot be comprehensively viewed, thus ignoring the relationship between capital and liabilities, capital and management ability, and capital and operational risk. (3) Many enterprise executives lack understanding of modern financing tools, and simply think that financing is to borrow from banks, which is a single financing method. As a result, when the traditional financing channels are cut off, most small and medium-sized enterprises are in a desperate situation, not only lacking the thinking concept of using other financing methods, but also lacking the operational ability of financing, let alone carrying out modern financing innovation.

3. The financial information is distorted and banks are afraid to lend. Many small and medium-sized enterprises lack standardized management, sound management system and financial control system, with distorted financial information and low credibility. Some enterprises provide false or even forged financial information from the so-called "own needs", which makes the accounting statements lose their reliability and authenticity. The main basis for banks to issue loans is the balance sheet and financial revenue and expenditure of enterprises. An enterprise with a good balance sheet and financial revenue and expenditure can easily get credit support from banks. Or conversely, false accounting statements from Dallas to the auditorium make it difficult to guarantee the bank's credit assets, and it is easy to form non-performing assets. For the sake of capital security and self-interest, banks will not easily issue loans.

(2) Reasons of financial institutions

1, financial institutions lack enthusiasm for credit. First of all, commercial financial institutions in China aim at maximizing profits. However, China's small and medium-sized enterprises have weak financial strength and small scale, and there are few assets that can be used as loan collateral. At the same time, due to its own conditions, it is impossible to find a large-scale enterprise to guarantee it. Secondly, some small and medium-sized enterprises have backward production technology, low product technology content, high debt management and poor efficiency. Banks are unwilling and afraid to support them from their own interests.

It is risky to lend to small and medium-sized enterprises. This is mainly caused by the information asymmetry of SMEs. In the loan behavior, the borrower, as the operator of the enterprise and the user of funds, has a comprehensive grasp of the financial information of the enterprise, while the bank, as the lender, can only understand part of the relevant situation of the enterprise through the financial accounting statements. In order to obtain loans, corporate borrowers often exaggerate their own advantages, narrow down or even cover up their own shortcomings to some extent, and the comprehensiveness and authenticity of their disclosure information are relatively poor. In the case of imperfect accounting system, national accounting supervision is limited, and it is impossible for banks and other financial institutions to require small and medium-sized enterprises to be generally audited and verified by information intermediaries. Financial institutions that operate independently and pursue profit maximization must take the minimum risk as the premise when lending. In order to ensure the safety of funds, financial institutions are inevitably reluctant to issue loans to SMEs.

3. SME loans are difficult to manage, with high costs and low returns. First of all, for small and medium-sized enterprises, the loan amount of a loan business is out of proportion to the management cost of the loan. Regardless of the size of the loan, financial institutions should operate according to almost the same procedures, and the management cost of the whole process from pre-loan investigation to loan recovery is almost the same, so the unit management cost of microfinance is bound to be high. However, the loan amount of small and medium-sized enterprises is generally small, and its management cost is higher than that of loans to large enterprises, thus affecting the enthusiasm of banks for loans to small and medium-sized enterprises. In addition, the information disclosure system of small and medium-sized enterprises is not perfect and the information provided is unreliable. Financial institutions must also use other methods to obtain more comprehensive and true information, which will further increase the management cost of loans. According to the survey, the management cost of SME loans is much higher than that of large and medium-sized enterprises. Therefore, financial institutions will not take SMEs as their first choice when granting loans. Only when the country is forced or restricted by certain conditions and cannot lend to large enterprises and large projects, will they choose small and medium-sized enterprises, which is undoubtedly one of the important reasons for their difficulty in lending.

(3) Other reasons

1, poor social credit environment. In other words, the low level of social reputation is also a factor that cannot be ignored in the financing of small and medium-sized enterprises. Mainly includes: (1) Small and medium-sized enterprises have poor debt repayment consciousness. After obtaining loans, many small and medium-sized enterprises do not actively repay their debts, but maliciously evade and default on their debts, do everything possible to delay their debts, and do not regard debt repayment as an obligation that must be fulfilled. (2) The ability of the law to protect the creditor's rights is poor, and the court does not execute the judgment result. When creditors protect their rights and interests through legal procedures, they often encounter the embarrassment of "winning the lawsuit without seeing the money" and paying the lawyer's fee. (3) Local protectionism interferes more. For example, during the period of enterprise restructuring, some local governments acquiesced or even condoned enterprises to evade bank claims. This social credit environment destroys the equal status of both parties to the economic contract and puts the creditors who have fulfilled their obligations under the economic contract in a passive position. In such a good credit environment, financial institutions will inevitably be more cautious when issuing loans, which will naturally increase the financing difficulty of SMEs. 2. Lack of effective credit guarantee system. The risk of providing loans and guarantees to small and medium-sized enterprises is high, which is a universal problem and systematic risk, and it needs the state to reduce the financing risk of small and medium-sized enterprises to an acceptable level through a mechanism. In this regard, the international practice is for the government to establish a special credit guarantee system for SMEs. In recent years, some local governments in China have also established some credit guarantee institutions, but the actual effect is not ideal: (1) The guarantee ability of guarantee institutions is low, because the source of guarantee funds in China is mainly local finance, and the financial input ability is limited, which is far from meeting the needs of society. (2) In order to control risks, the guarantee institutions all require the customers who apply for loan guarantees to provide counter-guarantees, and the conditions are harsh and not lower than the mortgage loans guaranteed by banks, which makes the credit guarantee institutions lose their original significance. It is difficult for small and medium-sized enterprises to seek guarantee, which will inevitably lead to financing difficulties.

3. The existence of "policy risk". In recent years, the state has adopted the policy of "grasping the big and letting go of the small" for enterprise development, and some local governments have unilaterally interpreted "letting go of the small" as giving up small and medium-sized enterprises. Some policies and measures are formulated without considering the characteristics of small and medium-sized enterprises, which makes banks unclear about the reform of small and medium-sized enterprises, leading to a serious deviation between demand and supply, and the funds supported by credit for the development of small and medium-sized enterprises can not meet the actual needs, and the intensity is seriously insufficient.

I think the strategies that should be formulated include the following aspects. Second, the strategy to solve the financing difficulties of small and medium-sized enterprises.

In view of the problems faced by the development of small and medium-sized enterprises, such as lack of financing intermediaries, single financing tools and poor financing channels, the solutions should also start from three aspects: enterprises, financial institutions and the government. It is necessary for small and medium-sized enterprises to improve their corporate governance structure and strengthen their ties with banks. It is also necessary for the state to formulate a loan policy for small and medium-sized enterprises as soon as possible, learn from foreign experience and open up more financing channels for small and medium-sized enterprises.

(1) Enhance the accumulation of self-owned funds and increase the rate of self-owned funds.

Strengthen the accumulation of enterprise's own capital, improve the enterprise's own capital ratio and management level, so as to change the enterprise's credit ability and then change the enterprise's own financing environment.

1. Enterprises should improve and innovate products according to market changes, and constantly strengthen the development of new markets to increase sales revenue.

2, should introduce advanced technology and production equipment, technical transformation, improve enterprise production management.

3. Enterprises should strengthen the management of accounts receivable, withdraw funds as soon as possible, and increase liquidity.

In short, enterprises should start from various angles, expand their income, enhance the accumulation of internal funds, and make enterprises embark on the road of benign expansion of their own funds. Only when the enterprise's own environment improves and the level of production and operation improves, banks and other financial institutions are willing to give it loans.

(B) improve and develop commercial credit financing

Commercial credit is a traditional financing method for small and medium-sized enterprises. It belongs to short-term debt financing, which is convenient but informal. Generally based on good business reputation, it is often used between cooperative enterprises with close business ties and very fixed relationships. Under the current situation, the ways to improve and develop the commercial credit financing system are:

1. Fully develop vertical business ties between enterprises, form loose business alliances with upstream and downstream enterprises in production and operation, and develop commercial credit through this vertical relationship.

2. Establish close relations with foreign trade intermediaries such as industrial and commercial enterprise groups or fixed partnerships with capital as the link, and make full use of commercial bills.

(C) the establishment of mutually beneficial cooperation between banks and enterprises

At present, the source of funds for small and medium-sized enterprises depends more on financial institutions such as banks. Therefore, small financial institutions such as city commercial banks should take serving small and medium-sized enterprises as the market positioning and fully support their development. Of course, small and medium-sized enterprises are numerous, complicated and risky, so it is necessary for credit personnel to continuously improve their business level and build a reasonable, flexible and efficient service system that conforms to the characteristics of small and medium-sized enterprises on the basis of paying attention to the operating principle of "high efficiency, safety and liquidity". At the same time, the support of city commercial banks to small and medium-sized enterprises can not simply stay in the financial relationship, but also rely on their own advantages in information, talents and management to provide intermediary services such as market information and financial consulting for small and medium-sized enterprises to help them solve problems, enhance market competitiveness and truly establish mutually beneficial and cooperative bank-enterprise relations.

(D) Further improve the credit guarantee system for SMEs.

Establishing and perfecting the credit guarantee system of small and medium-sized enterprises and enhancing their credit can ensure the stable, reliable and lasting capital investment of small and medium-sized enterprises to a certain extent, and solve the financial difficulties in their development well. Of course, because credit guarantee is an internationally recognized high-risk industry, strict measures should be taken to identify, prevent, control and disperse financial risks. First, improve market access conditions and make strict regulations on guarantee institutions, guarantee practitioners and registered capital. The second is to establish a credit system for social enterprises, so that honest enterprises can gain social recognition and enjoy priority and preferential treatment when obtaining funds.