On The Floating Charge In Sme Financing And Bank Credit Risk Prevention

Floating charge, which was passed through 'PRC Property Law' (hereinafter referred as 'Property Law') on March 16th 2007, is a new method of security. The greatest value of such method relies in the fact that it facilitates financing the SMEs without affecting the day-to-day business operations. There is no doubt that the introduction of this system increases the means of financing the SMEs, however, it brings the requirement of the risk control ability of the commercial bank. This article will first discuss the legal characteristics of the floating charge system and analyze the advantages of financing SMEs, then will bring out the legal problems that should be paid attention to when commercial bank applies this method to the process of credit business. At the same time, in order to control credit risk and ensure the safety of commercial bank financing, this article will give suggestions to the SEMs when concerns floating charge under the framework of 'Property Law'.