A Research On Application Of Financial Leasing In The Process Of SMEs Financing

SMEs are the foundation of our economy, with the rapid development of China’seconomy, they played more and more important role in the economy. However, our countryis in the process of economic transition, the labor is abundant, but the capital is relativelypoor. In the process of rapid development of SMEs, our financial system is still unable tomeet the financing needs of SMEs, and most SMEs will lead into financing difficulties thatrestrict the development and expansion of SMEs. Sources of financing for SMEs generallyconsist of the internal financing and the external financing. However, because most SMEsestablished for a short time with small scale, low profits and some other problems, SMEsgenerally have no consciousness to retain or are unprofitable to remain, and thereforeinternal financing cannot solve the financing problem.Therefore, SMEs have to seekexternal financing. However, for SMEs, because of their numerous reasons, applying tobank for loans are always time-consuming, and few SMEs can succeed to obtain loans. Atthe same time, those who can obtain financing through issuing stocks and bonds from thecapital market are very few, so for the vast majority of SMEs, the ways of financing wetalked above won’t work.Financial leasing is an innovative financial instruments combined the capitalrequirements with the equipment needs of enterprises. Financial leasing companies can relyon the unique professional assessment tools financing to SMEs in a relatively short periodof time, with a feature of separate "ownership" and "right to use". There are dealers, SMEs,financial leasing companies, and the equipment suppliers. And financial leasing is animportant link connecting the real economy and the financial system. Therefore, the use ofa financial leasing to solve the financing problems of SMEs is more in line with our currentreality.This thesis firstly analyzed the current situation of SMEs financing and then analyzedthe reasons of the difficulties SMEs facing in the process of financing from internalfinancing and external financing two different views. Then it analyzed the comparativeadvantages of financial leasing in SMEs financing through qualitative analysis. Financialleasing has lots of advantages, for example, flexible way to pay rent, delay taxes, improveliquidity, revitalize existing assets, improve the financial situation, so it is a practical choiceto solve SMEs financing problems. And then it described the major business processes, including developing SMEs customers, establishing a preliminary cooperation intention andconduct due diligence, project negotiations, internal review and approval of the leasingcompany, signed the sale contract and financial leasing contracts, project delivery andacceptance, paying rent on time, transferring the ownership, deal with lease residual value.Then the thesis proposed appropriate measures for risk management finance leasing companies to carry out financial leasing services to SMEs，for example, margin system,specifying the standard of the lease item, marking lease logo and registering property right,regular patrol assets, financing guarantee and mortgage. Finally, combining with the presentsituation of SMEs financial leasing, it proposed several suggestions that in favor of thedevelopment of SMEs financial leasing.