SME Financing Products Design

SMEs'financing needs can not be met in the process of growth and development,which result in the finacing gap.The basic reasons are the following areas:asymmetric information, business uncertainty, lack of collateral assets, benefits and risks gaps of the both sides in attitude and knowledge, government behavior and the impact of the financial system.At present, financing through banks and other financial intermediaries for indirect financing is one important source of private small and medium enterprises. But the information is not present, diseconomies in financing, business uncertainty and high failure rate,lack of collateral assets, the financial system defects, the impact of government regulation and other causes of the small and medium enterprises financing difficulties hindered the growth and development of SMEs.Based on a comparative analysis of SME financing products of American community banks and commercial banks of China,this article deems that American community banks' SME financing products have such advantages:diversification,simple elements, including government-guaranteed loan products, simple approval, short procedure and that business owners personal credit history will affect the result of commercial loan applications and so on.Meanwhile,China's commercial banks'SME financing products have such features:diversification,SME financing products, flexible lending elements, generally requires collateral or security and so on. However, they also have many problems:First, the products are similar and primarily based on traditional credit loans, mortgage loans, secured loans and discounted bills.Second,most banks have opened up a website dedicated SME financing forum, whick seems specifically for SME financing.Pratically there's no significant difference in SME financing products and products for large enterprises.Third, most of the loan approval time is long, and are subject to size restrictions.China's commercial banks'limitations of SME financing products mainly due to the following reasons:First, banks'own reasons. The current size of commercial banks is limited.National big banks lend the quality of loans to large state-owned enterprises and need to balance a good demand for loans to SMEs at the same time,which made them face difficulties in controlling the size of loans.Meanwhile.the talent pool of local commercial banks is not enough,and the input of funds in real SME loan product design is not enough, which result in a single variety of financing products for SMEs or even missing. Second, the Government's support is not enough. Third, there's a lack of viable credit assessment and credit guarantee system.To improve SME financing products, the paper put forward some ideas. Among them, the improvements in the system are the following assumptions:First, set up some local small and medium sized banks specially service for local SMEs. Second, Establish SME credit system. Third, improve the credit guarantee system and credit insurance mechanisms.Meanwhile,this artile also put forward some improvements in the products.