Abstract:
SMEs in China have been playing an important role in creating employment opportunities, sustaining strong economic growth, stabilizing national economy, promoting technological innovation and progress in the present national economic and social development process, which have also become an important force in China's economic development.
For Expanding Small and Medium-Sized Enterprises’ operations external financing is usually needed to ease the funding requirements in their development process. Bank loan is the most important source of external financing. But in reality the financing difficulties for most Small and Medium-Sized Enterprises (SMEs) exist for various reasons. First，banks don't attach much importance to SMEs due to their lower financing amount and greater number of small accounts, banks say, what they pay is not in direct ratio with what they gain. Besides, SMEs’ own limitation like instable operation, small size, poor anti-risk ability, opaque operating and financial information, lack of collateral plus banks' unitary investigation ways also hinder the banks from advancing loans to them, after that, which might affect their running circumstances and inevitably affect residents’ employment, economic stability, technological innovation, etc. Therefore, trying every means to solve their financing difficulties is of vital importance and pressing.
The successive fiscal and financial policies for supporting small and medium-sized enterprises do work to a certain extent, but obtaining financing is still very difficult for SMEs, in that case new ideas and methods are required to mitigate such financing obstacles.
On the basis of the introduction of SMEs' present financing position, to solve the financing difficulties of SMEs in the perspective of the Guarantee Group, this article takes SHENZHEN YIN-BAO UNION FINANCING GUARANTEE CO., LTD. as an example, hereinafter referred to as “YIN-BAO UNION GUARANTEE CO., LTD.’ The article analyzes the mechanism of guarantee companies towards solving SMEs’ financing problems. And for avoiding bank-enterprise information asymmetry, banks’ unitary way of investigation and lower unit return, this article points out that Guarantee Group can make use of their own information and resource advantages and collaborate with commercial banks. Actual cases of YIN-BAO UNION are also quoted to prove its efficiency and its drawback. Our own ideas and measures about the future development of Guarantee Companies are finally put forward, for controlling Guarantee Group's risk, governments, banks, and Guarantee Companies, etc. should make joint efforts, diverse mechanisms should be established, a reasonable risk control indicator should be set, and blind expansion should also be prevented simultaneously.
