Innovation Of SMEs Financing Business In XA Commercial Bank

In recent years, small and medium-sized enterprises (SMEs) have developed to be the most vigorous and important body in China’s national economy, and their contribution to the promotion of local economic growth, increase of tax revenue and improvement of employment rate is especially significant. However, in the course of their development, SMEs in general are confronted with such problems as difficulty and high cost of financing. Statistics from the survey by China Association of Small and Medium Commercial Enterprise show that, as to the process of obtaining loans from banks,42%of SMEs recognize it as being difficult,31%of SMEs regard it as being fairly difficult and27%of SMEs identify it as being very difficult. The interest rates of loans granted by commercial banks to SMEs are usually within the range of10-15%.Based on an analysis of the underlying reasons for difficulty and high cost of SMEs’financing in China from such perspectives as logic of economics, exogenous factors, and inherent characteristics of SMEs and financial institutions, this paper is to present a general observation of XA Commercial Bank, investigate the current development of its SMEs financing business, and reveal the main problems in its operations. With purposes of solving the problems of difficulty and high cost in SMEs financing, and promote the innovation of SMEs financing business in XA Commercial Bank, this paper employs SWOT matrix to evaluate the strengths, weaknesses, opportunities and threats of the bank, and concludes with ideas and proposals for the innovation of XA Commercial Bank’s SMEs financing business. XA Commercial Bank is expected to pursue their strategic missions within the current context by "serving the small and accomplishing the great", and realize great leap-forward development while addressing the difficulties in SMEs financing. XA Commercial Bank shall adhere to the principles of differentiated strategic orientation, diversified product innovation and efficient risk management. Measures, which can be taken by XA Commercial Bank in order to address the SMEs financing problems and facilitate transformation of economic development pattern and advancement of growth quality and efficiency in Xi’an, may include differentiated market positioning, enhanced collateral arrangement and credit rating systems, improved ex-ante assessment of SMEs loan application, optimized loan application procedures and services, advanced technology, specialized employee training, reduced expenses and sacrificed commercial interests for the common good.