Study On The Financing Strategies Of SMEs In Hexian

In China, more than90%small and medium-sized enterprises(SMEs) are distributed in the countries, who are the backbones of local socio-economic development, and playing important roles in stimulating industrial economic growth and optimizing residents’ employment and income structure. However, even the SMEs with well-organized and well-administrated systems are still plagued by the financing problems, which are still a "bottleneck" for them to expand the production, affecting the productive funds’ cycles of turnover and the reasonable expansions of their operational scale. How to improve SMEs’ financing availability in effective ways in order to solve the financing problems is greatly necessary and practical.In recent years Hexian SMEs have been developing fast with the features of a large number, distinctive local industrial structure and diversified-developing ownership structure, at the same time, the SMEs are limited in business scale and generally weak in profitability. Broadly speaking, Hexian SMEs have been promoting the county’s economic growth, industrial resources integration and employment, making important contributions to the local economic development.Hexian financial sectors and government departments having been making great efforts to support the SMEs’ financing. The financial sectors mainly constituted by banks continue to increase points and extend the service radiuses, and enrich their credit products; the government departments implements some supporting measures to promote the access of the SMEs’ financing, such as leading in organizing the docking of bank and SME, supporting and assisting the constructions of formal financial institutions, encouraging financial innovations, government funds depositing arrangement motivating bank’s credit support, and subsidies for SME financing costs.Nevertheless, Hexian SMEs are still faced with difficulties in financing. Firstly, SMEs’ credit ratings are low, and the approaches for credit enhancement are limited. Many SMEs don’t have sound financial systems and standard financial management; they lack core assets for pledge and credit enhancement approaches, thus can’t reach banks’ credit conditions. Secondly, the country’s financial service mechanisms are imperfect. The financial systems lack effective direct financing mechanism arrangement; the credit thresholds of large state-owned banks are generally high, and the banking services are of great homogeneity; the monopoly of indirect financing on the market results in higher financing costs of SMEs; the folk financing lacks effective channels. Thirdly, SMEs’ extensive development paths are conflicted with the national macro-economic policies.To solve Hexian SMEs’ financing problems, relative parties of the country should work together to build a set of systematic financing strategies. Relevant government departments need to introduce commercial credit guarantee institutions, promote SMEs’ credit constructions, and establish the special financial compensation fund, so as to broaden SMEs’ credit enhancement channels. The SMEs’ investment and financing service center, whose formation is promoted by relevant government departments and involved by the county’s financial institutions, should actively look for new investment entities such as fund and securities companies, provide those SMEs who intend listing in the stock exchanges for IPO guidance, provide SMEs for private debt issue services such as consultancy and agency, look for venture capital and financial leasing institutions to dock with SMEs, and provide folk capital for an investment platform, so as to increase the supplies of direct financing resources. Single enterprise credit lines of the large state-owned bank should be raised, bank credit arrangement mechanism should be set up, and SMEs’ financing cost structure should be reconstructed, so as to improve indirect financing support. In addition, the SMEs should be to optimize the financial management, improve their earning capacity, and promote scientific and technological innovations and equipment upgrades, so as to enhance their own powers. With these measures, Hexian SMEs’financing difficulties can be overcome, and they can develop soundly.