A Research On CDB’s Collection Note Projects For SMEs

SMEs are an important force in the economic development of china, their development plays an more and more important role in the growth of the national economy. In the end of2011, SMEs contributed more than60%of GDP,50%of tax and provided80%of the urban job positions. But the financial resources supplied to SMEs were extremely disproportionate compared to the role that SMEs played in the national economy. Low level of credit, the lack of collateral and the lack of effective security mechanism, always make it too hard to solve the financing problem of SMEs.In recent years, many projects are carried out to solve this problem, such as the launch of the SME board, which provides a good channel for the financing of SMEs, but the GEM Listing has a strict approval process and a very long review time for most SMEs, so the problem of financing has not been greatly improved. In2007, the collection bonds for SMEs issued by the National Development and Reform Commission is an innovative milestone for financing of SMEs, but had little effect. In2008, collection notes for SMEs, which can effectively solve the financing difficulties of SMEs, were issued by PBC and NAFMII and developed quickly in recent years. Collective notes have a simple registration process, shorter reporting time, lower interest rates and debt financing costs, so it provided an effective solution for financing of SMEs. Therefore, the implementation of the collective notes is an innovative creation and breakthrough of direct financing of SMEs in China.This article describes the development of collection notes for SMEs in China, outlines the issue process of collection notes, introduces the key contents of collection notes, such as management policy, issue procedures, credit enhancement. The first collection notes for SMEs in Foshan City which were issued in2011by China Development Bank, were analyzed as an example.The content of the paper is organized as follows:The first part introduces the research background, definition, literature review, research ideas, methods and innovation features. The second part introduces the theoretical research of financing and the collection notes for SMEs. The third part introduces the development status of China’s bond market and the collection notes for SMEs. The fourth part introduces the issue process design of collection notes, from perspectives of management policies, the issue process and credit enhancement. In the fifth part, the first collection notes issued by CDB for SMEs of Foshan city, was analyzed to present the innovation and inadequacies of Regional Preponderance Mode. Part VI proposes methods to improve the collection notes for SMEs.The innovation of this paper is the analysis of the current development status of collection notes for SMEs by sorting through the latest data and the in-depth analysis of the financing methods of collection notes and the Regional Preponderance Mode. From the perspective of banks, this paper proposes to establish a better mode for credit enhancement, learn from the financial service mode for supply chain to create better collection notes for SMEs. So it has a strong significance to improve the development of Collection notes for SMEs in China.