The Research Of SMEs Collective Notes Financing

With the rapid development of China’s economic, the contribution of SMEs to the economy has become more and more prominent. However, the financial problem of SMEs has restricted the development of themselves. There are some internal reasons from enterprises themselves and there are also external reasons from Bank and the Government. A SME collective note is a new path which designed specifically to solve the financing problem of SMEs. Collective notes financing breakthrough some problems of SMEs,like the small scale and the low credit shortcomings. It increases the scale and credit through "collection" and at the same time appeals more banks and other institutions. Until March22,2013, there are103SMEs collection notes successfully registered on the Nation Association of Financial Market Institutional Investors. The registered capital is26.375billion Yuan. There are only76SMEs collection notes have been successfully issued for SMEs financing, which adds up to18.44billion Yuan. They solve the funding shortage of some SMEs. It is obvious that the collection bill for SMEs plays a significant role in solving the financing problem of SMEs. However, since the collection notes just started years ago, the scale is still small and there are many deficiencies. Therefore, it is necessary to conduct further research on it. This article analyzes the current the issue situation of collection notes, procedures, compares the collective notes with other means of financing and finally concludes the advantages and the existing problems in the practical operation of the collective notes. At the end of this essay, the author also submits the improvement measures to address these issues, so that the collection notes for SMEs becomes an important tool to solve the financing problem of SMEs.This paper defines the Concept of SME collective notes first and then discusses the background, meaning and purpose of this essay. Following that, the essay has a relevant literature review, and then discusses the basic theory of capital structure theory, such as capital structure, asymmetric information theory, adverse selection, moral risk theory and SME clusters finance theory. Secondly, the essay analyzes the issue of collective notes, mainly from the issue of the total market deliveries and the issue of interest rates and duration. The author compares the collective bills with other financing methods and then summarizes the advantage of the collective notes. It is concluded the collective notes is one of the most innovative tools for financing of SMEs. The essay also analyzes the problems during the issuing and circulating of SMEs collective bill financing, such as the issue of security, limited financing body, the risks, the complicated procedures and the issue of sales. Finally, this article proposes corresponding strategies and specific programs to improve collection of notes, such as improving the system security of notes while issuing and circulating, establishing the coordination mechanism of the Government, intermediary institutions and SMEs.