Research on the Legal Issues Lie in the Domestic Small & Medium Enterprises ("SME") Financing Difficulties
|School||Southwest University of Political Science|
|Keywords||SME financing Pledge of accounts receivable financing Inventory pledge Insurance policy impawning Intellectual property rights pledge Personal insolvency|
Small and medium enterprise （SME） is a new force of economic development. Its role to promote development is obvious. SEM is playing more and more important part in China economic development. The goal of building a harmonious society in which all people will lead a prosperous life could not be realized without promoting SEM which featured of extensive coverage and good capability of offering job opportunities. By this procedure, the general difficulties faced by SMEs attracts the attention worldwide. So far the financing difficulty is a prevailing problem hinging the development of small and medium enterprises. That is the main topic of our paper, expected to provide some useful thoughts to solve the financing difficulties.The paper consists of two parts besides the preface and the summary.In the 1st part of the paper, we introduced the financing situation and main hindrance faced by SME in China. The finance is the top bottleneck to the development of SME. Hence we focused on the reasons for financing difficulty faced by SME. We deem the chief reason lies in SME inherent defects: like the majority of SME are in the lower end of industry chain which leads to greater risk; irrational internal governance structure; substandard financial management; poor commercial credit and shortfall of collaterals. This part also analyzes for improvement in the external environment, including legal system, credit system, policy system and financial system.In the 2nd part, based upon the previous illustration and personal practical experience in bank system, the main legal issues in SME lending practices are thoroughly analyzed. And from practical aspect for development SME financing service, we call on two fields to be effectively justified and clarified which comprises as definition of collaterals with related procedures for valuation and liquidation as well as penalty system development; and to establish personal insolvency system on the basis of China’s actual conditions. Constructive and feasible suggestions were also represented accordingly.