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On the financial crisis SME financing

Author: YuHong From: www.yourpaper.net Posted: 2010-01-07 14:39:29 Read:
Paper Keywords: financial crisis; small and medium-sized enterprises; financing

Abstract:
SMEs is an important force in the development of the national economy. Funds its life, survival and development of the shortage of funds, has been plagued by difficulties in financing small and medium enterprises. Financial crisis, the SME financing the road to become more difficult. This article tries to analyze the status quo, because of the financial crisis SME financing, and inquire about effective countermeasures.


The financial crisis triggered by the U.S. subprime mortgage crisis in 2008, quickly spread around the world like a plague. The current financial crisis has seriously affected the real economy, reform and opening up of the Chinese economy also affected, especially the coastal areas of the real economy, have bankruptcy. For those who have very difficult to survival and development of SMEs, even worse. How SMEs through the crisis is of great concern to government departments and SME managers, the biggest problem of the survival and development of SMEs is the shortage of funds.

the financial crisis situation, the SME Financing Status

SMEs in China in recent years, the rapid development and has formed a considerable scale, play an increasingly important role in the national economy. According to statistics, China's small and medium enterprises accounted for 99% of the total number of enterprises, GTP contribution rate of 60%, 75% of employment opportunities, creating about 50% of exports and tax revenue, but generally the capital chain seriously tight, restricting the main factors for the development of SMEs.
Financing channels for a single. According to statistics, China's small and medium enterprises in the financing channels, the accumulation of 56%, relatives and friends to borrow 14%, financial institutions, financing 30% (the vast majority of a period not exceeding six months of bank loans), financial institutions can only fill the current financing the funding gap.
High financing costs, a heavy burden. Many types of small and medium enterprises, the disposable capital requirements, high frequency, increase the cost of financing. For the bank in terms of the size of loans for SMEs, more often, weak credit guarantee, caused by the bank high operating costs, administrative expenses rose. Banks to improve SMEs lending rates, resulting in the cost of financing for SMEs significantly improved.
Financing risks, the impact of business survival. SMEs' access to short-term bank loans, corporate assets is less affected by the operation, may result in the return of bank loans difficult; banks to control risk, not for loan repayment difficulties enterprises to provide follow-on funding, a direct threat to the enterprise survive.

Second, the financial crisis situation, the financing difficulties of SMEs reason

From the the SMEs own point of view:
(1) Operating risks. Ownership and management rights of small and medium enterprises are generally concentrated in the hands of the boss in the management process, the relative lack of long-term business development strategy, production and operation of enterprises with a certain degree of uncertainty, there are some operational risks. Bank loan approval, to consider the business risk. Financial crisis, SMEs in order to reduce the prices of raw materials, rising labor costs, the rise in operating costs, the profit margin of survival greatly compressed, operating at greater risk, the bank and will not easily approve these loans to enterprises.
(2) The financial system is not perfect. SMEs in small-scale, short set up time, frequent staff changes. Result in financial management is not standardized and unstable. Many companies to evade taxes, issuing false financial statements. The financial crisis, the financial position deteriorated further, in order to get a loan, it is possible to disguise financial loss, financial fraud. This makes the bank may not be able to distinguish real true financial position of the enterprise, the enthusiasm of a direct impact on bank lending.
(3) asset-backed satisfactory to the Bank. As SMEs own weaknesses and shortcomings of bank loans to SMEs to provide the necessary asset-backed collateral. Financial crisis, banks from the overall market environment and their own interests, the more stringent requirements for asset-backed collateral. SMEs generally lack the fixed assets and can guarantee higher costs of other assets, asset valuation. These have reduced the possibility for SMEs to obtain bank mortgages.
From the point of view of financial institutions:
(1) state-owned commercial bank loans to SMEs policy imbalances. China is still based on the system of the four major state-owned bank-based financial institutions. SMEs due to their own economic strength, financial management and other reasons, make banks more cautious when approving loans to SMEs. The financial crisis, banks in order to maintain the best level of profitability, in order to avoid the risk of bank credit "Bao Dai small" practice become inevitable. So that small and medium enterprises to timely loan funds even smaller. Even if there is a small part of the SME access to finance, the level of interest rates in the benchmark rate on the basis of generally go up 30% to 40%, a direct result of the strong demand for capital finance for SMEs chain tighter.
(2) the lack of specialized services to small and medium-sized financial institutions for loans to SMEs. The current system of banking organizations in China, but also did not like the developed countries, there are many specialized bank financing for small and medium-sized businesses. There are a number of small and medium-sized commercial organizations, the general own management level is not high, lack of development, which also weakened financial support to SMEs. In the financial crisis, these small and medium-sized financial institutions will be more to consider their own profitability and loan security, the approval of loans to SMEs will be more cautious.
(3) direct financing channels for SMEs is not smooth. Financing channels can be direct financing, it can be indirect financing. For now, China's small and medium enterprises through the issuance of stocks and bonds financing direct financing channels immature, not smooth. SMEs can only rely on indirect financing, which is to rely on the bank to achieve the purpose of financing. Financial crisis, the conditions of the banks providing loans to SMEs mean increased porridge, and ultimately to obtain bank loans, more difficult.
From the government in terms of:
The support of the government departments have been inclined to large enterprises, large-scale implementation of preferential policies to large enterprises, and for efforts to support SMEs, it is obvious enough; difficult to enjoy the corresponding preferential policies, SMEs. After the financial crisis, the collapse of a large number of small and medium enterprises, the government has also taken some measures, but still a far cry away from the needs of small and medium-sized enterprises.

Third, the financial crisis situation to ease the financing difficulties of SMEs countermeasures

Improve their own system
(1) in advance to do demonstration, a full assessment of the financing efficiency of capital use, is the premise of good financing for SMEs. SMEs precisely because of the shortage of funds, financing difficulties, in which the economic development of complex and changing environment, there are many unfavorable factors. Therefore, the small and medium enterprises in the planning of a financing, the first delivery of funds to make full feasibility analysis of full proof of funds for the enterprise production and operation of security or for the expansion of the size of the market competition, or for high-yield risk investment projects.
(2) a solid working capital, and continuously improve capital gains, is the basis of the financing needs of SMEs. Market economy, economic efficiency is the first and only with good economic and development prospects of the business, the bank will be assured of the funds devoted to him, and allow businesses to invest in its production and operation, and derive the expected benefits. SMEs in its capital strength is not strong enough case, it must be based on reality, sound system, improve the management focus on production, optimize operations, solid operators of existing funds, accelerate cash flow, and constantly improve capital efficiency, SMEs benign financing needs, but also small and medium-sized enterprises to seek survival and development foundation.
(3) have good communication skills, the essential qualities of SMEs' access to financing. SME financing regardless of the scale of financing, or financing channels and means of financing are not comparable to other large enterprises and listed companies, because neither the specialized agencies and personnel, and no sound financing system, in order to establish a good financing environment, excellent communication skills will be key to corporate success financing. SMEs must take the initiative to communicate with the bank, its detailed description of the principles of corporate management, development plans and financial position of the basic situation of enterprises, focusing on the advantages of technological innovation and the future broad prospects for development, truthfully facing enterprises today financial difficulties, and provide detailed information on the use of funds and recycling program, with a sincere trust and win its approval, with practical action and prospects for the development of enterprises. In the process of the use of funds, it is still necessary to maintain close communication with the bank in order to maintain good relations of cooperation, are regularly invited to the bank staff to inspect the production site, to deepen their understanding of the business to verify that the funds devoted to the actual conditions of use understanding of the future prospects for the development and funding schedule recovery security, thereby enhancing confidence in the enterprise, to enable them to voluntarily give more support. It can be said, for each SME, able to maintain good communication with the bank relationship, the essential qualities of its financing strategy.
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