On Accelerating The Development Of China's Commercial Banks Lending Small And Micro Enterprises

Since2013, SME have comprised99percent of national companies and its grossoutput has increased up to more than a half of GDP, which has substantially lifted domesticemployment rate. Hence, all these fact has shown us that the growth of SME is making adirect and important impact on national economy.However, difficulties in financing have always been a major problem that limits SMEgrowth. Due to the narrow channels of financing, lending from commercial bank hasbecome a major source of financing for SME. There are several worried factors on the wayof SME development, such as small size, vulnerability of market, and lack of collateral,troubles in internal and external financing. For these reasons, it is not surprised thatgovernments give enough attention on SME and issue policies for ensuring its healthydevelopment. Also, a government is providing guidelines and incentives that encouragecommercial bank loans for national SME. In this way, the loan balance for SME has gaineda large increase so far. Yet, there are still many obstacles factors which are affecting thedevelopment of commercial banks’ lending business for SME. Even that, there is still alarge credit gap that needs to be filled in SME financing. As a result, it is necessary fornational commercial banks to give a further research and by this way, set up more positiveand effective strategies in bank loan services for SME.This report begins with the overview of the features and theories related to SMEfinancing and then show the importance of improving bank loan services for SME basedon current situations of our national commercial banks. Additionally, with elaboration ondifficulties that banks are facing in loan services to SME, it will examine problems thatSME may encounter when applying bank loans. Through a analysis of some ways thatforeign banks usually apply when funding SME, this report also give useful suggestionsand experience that Chinese business banks can draw from. Finally, it will recommendseveral counter measures for Chinese commercial banks to overcome difficulties in SMEloan business. As a writer, I hope this report can provide hints and instance to improvecommercial bank loan services for SME in China.