Sustainable Development Of Small Loan Companies

With the development of China's rural economy, significant restrictions arise, such as imperfect rural financial system, a limited number of financial institutions, and the absence of financial services. Similarly, since China's reform and opening up, an increasing number of small and medium enterprises (SMEs) have been developing up, who contribute greatly to GDP growth for China, population employment, and tax revenue, etc. However, many SMEs find themselves impossible to finance from banks and other formal Funding institution to obtain loans, which has become the bottlenecks that restricts the development of a large number of SMEs.At the same time, private financial market booms in China, especially in economically developed areas in Jiangsu and Zhejiang, a huge amount of private capital flows. While private finance, to some extent, do help SMEs and farmers solve the difficult problems loans, it still cannot be denied that its informal, invisible and non-regulatory state bears a lot of economic risks, and even more it might be a threat to national financial security and social stability.To solve the "three rural" and SME financing problem, in 2005 the People's Bank and the China Banking Regulatory Commission jointly launched the pilot small loan companies. After the first pilot of the seven small loan companies had achieved remark able results, on May 4,2008 the People's Bank and the China Banking Regulatory Commission issued a "micro-loans company pilot guidance", planning to further expand the small loan company pilot. Encouraged in a variety of policies, small loan companies have sprung up in the country, as of the end of June 2010,1940 small loan companies were set up nationwide. A large number of small loan companies embraced the business booming, along with that came the issues of inadequate capital, internal management confusion, lack of personnel, and uncertain future development. The suspension if small loan companies can keep sustainable development has drawn the attention of experts in research on rural finance and financing of SMEs, experts and scholars, and related administration institutions.Given the importance that small loan company financial system has in innovation in China, rural financial development and resolution of problems in getting loans for SMEs, Based on the location of a small loan company's economic environment, financial environment analysis, leads to this small loan companies, and through the development of the specific circumstances of its introduction, summarized the problems in its development, this part can be described as questions. Following that, the possible reasons are analyzed. Finally, solutions are proposed:the author's first external support to sustainable development of small loan companies, and specific solution to address small loan companies sustainable development needs, including internal management model, credit product innovation, multi-channel financing and ways of future development.Structurally, the article is divided into six parts, the first three parts introducing a small loan company's background knowledge and relevant theoretical knowledge. The fourth and fifth parts briefed departments of small loan companies, and raised in this part of the problem to be solved, with analysis of related issues. Article six is the focus of this article, but also the innovation of this article, this section presents a small loan companies to solve specific measures for sustainable development.