Of the more than 42 million SMEs nationwide, only 10% have obtained bank loans, 5% received government financial subsidies, and less than 1% have been targeted by venture capital...
Recently, the "9 to 1 China SME Sustainable Development Forum" was held in Beijing. It was learned that in the face of the increasingly severe financial crisis, the state has recently introduced many policies to promote SME financing, such as relaxing loan quotas for SMEs and reducing deposit and loan reserve ratios. However, due to reasons such as high financing thresholds and information asymmetry between enterprises and banks, some SMEs in urgent need of financing still find it difficult to enjoy policy support.
Eighty percent of SMEs still remain outside
Beijing Zhongke Yaguo Biotechnology Co., Ltd. is a high-tech enterprise dedicated to custom peptide synthesis services and peptide drug research and development. The company's general manager, Zhang Wentao, said that for SMEs, the funding bottleneck is always a problem they need to solve in order to grow and develop. Although the state has introduced various preferential policies to support SMEs, and financial institutions also offer many loan products targeted at SMEs, the actual thresholds for these products are relatively high and not easily reachable by SMEs. After reviewing the Beijing Bank's Little Giant SME Optimal Financing Plan, she remarked, "Many loan products do not meet our company's requirements; only intellectual property pledge loans seem feasible." In her words, banks are commercial entities that also require returns. Therefore, "only when SMEs survive on their own will financial institutions come to rescue you."
"I had already found a store location in Beijing before the Olympics, and there were also foreign merchants ordering our products, but without sufficient financial support, I missed this once-in-a-lifetime market opportunity," said Cheng Xiaofeng, the factory director of Hebei Boye Ghost-Axe Artworks Factory, with regret. Due to lack of funds, his factory is currently semi-operational. He told reporters, "Local financial institutions couldn't lend money, so I went to Beijing to find banks, but upon hearing that the collateral was a few old houses in my rural hometown in Hebei, they rejected me again."
Many SME executives expressed to reporters that since the types of collateral accepted by banks are very limited, usually including real estate and deposit certificates, but SMEs are typically in the early stages of development with limited fixed assets, even if they operate well, they often cannot provide collateral. The guarantees they can offer often don't meet the bank's requirements, which excludes most small businesses from obtaining bank loans. "Difficulties in guaranteeing" and "difficulties in mortgaging" have become major obstacles for SMEs seeking loans.
SME Credit System Needs Improvement
High bank loan thresholds mean that bank financial products are unsuitable for SME financing needs. One reason for this situation is the large amount of information asymmetry in the SME credit market. With over 42 million SMEs nationwide, achieving complete information alignment with financial institutions for so many enterprises is indeed no easy task. Clearly, banks and other financial institutions cannot possibly understand all the needs of every enterprise, nor can they design financial products tailored to each one. In such a situation of information asymmetry, many financing demand messages may not even enter the field of vision of financial institutions. At the same time, financial institutions are unclear about the creditworthiness of SMEs. On the other hand, serious information asymmetry also makes it easy for moral hazards to occur in the SME credit market, such as higher default rates. Additionally, SMEs lack necessary financing knowledge and are not well informed about loan policies and supportive measures. Some business leaders admitted that they did not understand the types of SME loans offered by banks or the loan approval process. This leads to some SMEs failing to secure loans because they cannot submit effective asset collateral or qualified guarantors.