What are the reasons for the difficulty in financing small and medium sized enterprises?

The classification standard for small and medium-sized enterprises in China is that the number of employees is less than 2,000 people, or the sales revenue is less than 300 million yuan, or the total assets are less than 400 million yuan. Among them, medium-sized enterprises must meet the needs of more than 300 employees, sales of more than 30 million yuan, total assets of more than 40 million yuan, and the rest are small enterprises. Compared with large enterprises, due to factors such as small enterprise scale, high loan risk, limited management level, and imperfect credit guarantee system, small and medium-sized enterprises have few financing channels, low financing ability, and low support from financial institutions, whether it is an indirect financing market or a direct financing market, it is difficult to raise the required funds.

Financing is currently the most prominent problem encountered in the development of small and medium-sized enterprises. However, this problem is not caused by unilateral causes, but by the combined constraints of multiple factors. China is currently in a period of enterprise transformation and economic structure upgrading, small and medium-sized enterprises can not adapt well to the transformation of their own property rights role and business model during this period, coupled with China's laws and policies and the external economic environment is still very imperfect, financial institutions do not trust small and medium-sized enterprises, etc., resulting in the deterioration of the financing environment for small and medium-sized enterprises, and narrow financing channels.

1) The social credit system is still not complete. The borrower, guarantee, mortgage, risk compensation, accountability and other links are still imperfect. In recent years, all kinds of financing guarantee companies have developed rapidly, which has played a great role in improving the problem of small and medium-sized enterprises, but in the face of the imperfect situation of the credit system, especially in the past two years when the real economy has generally been sluggish, it is not an isolated phenomenon to dare to guarantee and shrink the guarantee, and the funds of the guarantee company are turned to high-yield and high-risk business areas such as usury, which is easy to develop into a vicious circle.

Therefore, in the face of small and medium-sized enterprises, banks dare not lend, and guarantee companies dare not guarantee.

2) There are fewer ways for SMEs to raise funds directly in the capital market. In China's ** market, the number and market value of state-owned listed companies are still much higher than those of small and medium-sized enterprises. From the perspective of the corporate bond market, it is difficult for small and medium-sized enterprises to obtain the qualification of issuing bonds for financing.

In recent years, the emergence and rise of financial innovation varieties such as credit enhancement collective bonds and private placement notes for small and medium-sized enterprises have indeed made some breakthroughs, but there is still a long way to go to achieve the desired effect.

3) The quality of small and medium-sized enterprises is not high. The sense of integrity of some enterprises is still weak; Some enterprises feel that it is very normal to repay the loan a few days late, and even if they have money, they do not want to repay the bank loan, and the repayment awareness of the enterprise lags behind the needs of the bank credit system and risk management. This is also the reason why small business financing is basically not guaranteed by credit. The operation and management of departmental enterprises lags behind, the governance structure is impossible to talk about, and the bank lacks sufficient information and trust to judge the profitability of enterprises; In small businesses, incomplete and unaudited accounting statements are common, on the other hand, there is relatively little information published by small businesses; Even with all the information that the enterprise can provide, the bank is sometimes unable to assess the profitability of the enterprise, and the bank prefers to return the loan due to risk considerations; This is also the reason why small business lending banks pay more attention to guarantees.

I believe that the difficulty of financing SMEs is a long-standing systemic problem for many reasons. There are three key constraints from a business perspective:

First, the scale is small and the accumulation is small, which makes it difficult to provide effective collateral;

Second, the financial system is not standardized, the transparency of information is poor, and it is difficult to give objective judgment on the credit status;

Third, there is a general lack of core competitiveness, performance is not stable enough, and development prospects are difficult to assess. There are also practical difficulties in providing financing for SMEs from a bank's point of view:

1. Due to the lack of direct financing channels and the fact that diversified financing platforms have not yet been fully opened to small and medium-sized enterprises, most of the capital needs of small and medium-sized enterprises rely on bank credit, and the financing pressure is concentrated in the banking system;

2. The risk compensation mechanism is not perfect, the operating costs of small and medium-sized enterprises are high, and the risks are large, which are borne by the banks alone, which aggravates the cautious lending of banks;

3. The pre-tax write-off policy is relatively strict, coupled with strict business accountability and performance appraisal, and in the face of the evaluation pressure of investors and regulators, the enthusiasm of banks to carry out financial services for small and medium-sized enterprises has been affected.

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According to relevant data, so far, there are more than 42 million small and medium-sized enterprises in China, accounting for the total number of enterprises, 4.6 million small and medium-sized enterprises registered by industry and commerce, and 38 million individual and private enterprises. The value of final goods and services created by small and medium-sized enterprises accounts for about 60 per cent of GDP, the goods produced account for 60 per cent of total social sales, and the tax paid has exceeded half of the total, providing about 80 per cent of the country's urban jobs. Small and medium-sized enterprises, including private enterprises, have become the main channels for expanding employment.

It has provided about 75 jobs in urban areas, not only resettled a large number of laid-off urban workers, but also absorbed a large number of rural surplus laborers, effectively solved the problem of transferring and employing rural surplus labor, alleviated the contradiction between labor supply and demand, and thus ensured social stability and economic development. Small and medium-sized enterprises are becoming the main force of innovation in China.

While small and medium-sized enterprises, especially small and medium-sized private enterprises, are developing rapidly, they are also encountering many problems. Among them, the shortage of funds and the narrow financing channels have become important factors restricting the development of small and medium-sized enterprises.

At present, the financing channels for small and medium-sized enterprises are very narrow, except for a few large and well-known enterprises, the financing capacity of ordinary small and medium-sized enterprises is limited. At present, there are three financing channels for enterprises: applying for loans from banks, issuing corporate bonds, and issuing direct financing for listing.

The shareholding reform of state-owned enterprises has been regarded as a basic measure for the reform of state-owned enterprises, especially large and medium-sized state-owned enterprises that are related to the control of the state-owned economy, and it is very difficult for small and medium-sized enterprises to issue corporate bonds and raise funds through listing. On the other hand, it is difficult for small and medium-sized enterprises to obtain approval for the issuance of corporate bonds due to the financial risks involved. Judging from the current situation, SMEs are mainly financed by their own funds and bank loans.

In fact, it is very difficult for small and medium-sized enterprises to obtain loans from banks.

Judging from the current situation, small and medium-sized enterprises have not yet established an external market financing system, and they are basically internal financing, and they have snowballed in their own development, making it difficult for enterprises to form large-scale production. The contradiction in funds faced by small and medium-sized enterprises is very prominent, and many enterprises with profitable projects cannot give full play to their capabilities on the largest scale because it is difficult to raise the necessary funds, and this has become an important "bottleneck" restricting private enterprises.

In order to promote the rapid development of small and medium-sized enterprises, especially small and medium-sized private enterprises, it is necessary to establish a sound financing system, and the most fundamental thing is to establish an external financing system for enterprises, that is, a market financing system.