Example Analysis on Financing Difficulties of Small and Medium-sized Enterprises
Introduction: According to the law, as a contractor of an enterprise, the contractor only has the right to contract for the operation of the enterprise, and does not have the right to deal with the enterprise to invest in financing and other major matters. Since the enterprise is run by the county, it is likely to be a state-owned enterprise. Whether the state-owned enterprise needs financing is decided by the enterprise or the shareholders of the enterprise, that is, by the local state-owned assets management department.
Reasons for SMEs' financing difficulties
SMEs' financing difficulties are a long-standing systemic problem for a variety of reasons. From the point of view of the enterprise there are three key constraints: First, the small scale, less accumulation, it is more difficult to provide effective collateral security; Second, the financial system is not standardized, information transparency is poor, it is more difficult to give an objective judgment of the credit status; Third, the general lack of core competitiveness, performance is not stable enough, it is more difficult to assess the prospects for development. From the bank's point of view to provide financing for small and medium-sized enterprises there are also practical difficulties: First, due to poor direct financing channels, diversified financing platform has not been fully open to small and medium-sized enterprises, resulting in small and medium-sized enterprises most of the capital needs rely on bank credit, financing pressure is concentrated in the banking system; Second, the risk of inadequate compensation mechanism, small and medium-sized enterprise loans, high operating costs, high risk, borne solely by the bank, aggravated by banks Cautious lending; Third, the pre-tax write-off policy of non-performing loans is more stringent, coupled with strict operational accountability and performance assessment, in the face of investors and regulators to evaluate the pressure of the bank to carry out the enthusiasm of SMEs financial services have been affected.
Small and medium-sized enterprises financing difficulties in the status quo
First, the proportion of small and medium-sized enterprises loan coverage and financing scale is low. The threshold for SMEs to issue shares and bonds publicly in the capital market for financing is high.
Second, the financing cost of SMEs is higher. The comprehensive financing cost of small enterprises is generally 23 times the benchmark interest rate. The cost of private financing is even higher. According to some large guarantee companies, the current annual interest rate is generally 20% 30%. And the financing procedures for small and medium-sized enterprises are cumbersome and time-consuming.
Third, the financing of small and medium-sized enterprises in different regions and industries is very unbalanced. For example, the central and western regions are not as good as the eastern regions, and traditional enterprises such as manufacturing, catering and retailing are not as good as technology-based enterprises.
Fourth, the problem of financing difficulties for SMEs is complicated. Small businesses have high gearing, weak capital strength, by the economic cycle and industry policy impact fluctuations; small business loans have a "short, small, frequent, urgent" and other characteristics of the traditional big business model is difficult to adapt to the needs of small businesses; small businesses single financing amount is small, difficult to finance from the capital market.
Example analysis of SME financing difficulties
Embarrassed microfinance companies
Case background:
Wenzhou Lucheng Jiexin Microfinance Company was established in 2004, the capital of 10,000,000 yuan, the company was founded, has been successful for the small business and personal loan financing of about 8,000,000 yuan. Small business and personal loan financing of about 800 million yuan. The company mainly operates personal loans, enterprise loans, private loans, business loans, unsecured loans, business loans, short-term borrowing, due repayment, revolving loans, credit loans, capital borrowing, and major banks for long-term cooperation, and has established a strong relationship, through continuous business contacts, the formation of a good foundation for credibility. The company is committed to providing enterprises and individuals with comprehensive loan consulting and loan services, including the design of loan schemes, comparative analysis of repayment methods, loan applications and loan-related procedures, through professional, personalized, one-on-one consultancy services, to create a service platform for corporate personal loans.
Borrowers applying for loans should have the basic conditions of having a market for their products, producing and operating effectively, not crowding out and misappropriating credit funds, and scrupulously abiding by the credit, and should meet the following requirements:
A. There is the ability to repay the capital and interest on time, and the original interest payable on the loan and the maturity of the loan have already been paid off; if not, the repayment plan approved by the lender has already been done.
Second, in addition to the natural person and does not need to be approved by the business sector registration of business corporations, should go through the business sector for annual inspection procedures.
iii. A basic account or general deposit account has been opened.
Fourth, in addition to the provisions of the State Council, limited liability companies and joint-stock companies, the cumulative amount of foreign equity investment does not exceed 50% of its total net assets.
v. The gearing ratio of the borrower meets the requirements of the lender.
vi. For applications for medium- and long-term loans, the ratio of the corporate owner's equity of the newly constructed project to the total investment required for the project is not less than the ratio of capitalization for investment projects as stipulated by the state.
Rights of the Borrower:
I. It can independently apply for loans from the host bank or other banks' agencies and obtain the loans in accordance with the conditions;
II. It has the right to draw down and utilize all the loans in accordance with the contract;
III. It has the right to reject the additional conditions other than those stipulated in the loan contract;
IV. p> iv. the right to reflect and report the situation to the lender's superiors and the People's Bank of China;
v. the right to assign the debt to a third party with the consent of the lender.
The process of the loan is also relatively simple: make an application (with an application form: need to specify the purpose of the loan, the amount, contact address, name and landline phone and cell phone) → preparation of information → data review → verification of the submitted materials (assessment of the mortgaged property) → approval → signing of the contract → disbursement of the loan → repayment of the quarterly interest rate → repayment of the loan at maturity.
Case Background:
Red Star Company is a commodity distribution enterprise, a VAT general taxpayer, and a small and medium-sized enterprise financing business (without the approval of the People's Bank of China.) In June 2004, Red Star Company purchased a large piece of equipment in accordance with the specifications, models, and performance required by the South China Company, and obtained a tax-control The price stated on the VAT invoice issued by the cash register is RMB5 million and the VAT amount is RMB850,000. The equipment is expected to have a service life of 10 years (urban maintenance and construction tax rate is 7% and education surcharge is 3%). Red Star Company, according to the situation, intends to use the equipment with small and medium-sized enterprise financial leasing leased to the company in the South, Red Star financial personnel for the company to develop the following two sets of leasing programs:
Program 1 lease for 10 years, after the expiration of the ownership of the equipment belongs to the company in the South, the amount of the lease of 10 million yuan, the company in the South to pay the rent at the beginning of each year, 1 million yuan.
Option 2 lease 8 years, the total amount of rent of 8 million yuan, the company paid 1 million yuan at the beginning of each year, after the expiration of the red star company will recover the equipment, equipment residual value of 2 million yuan.
Red Star's analysis and choice of options: In the case of Option 1, Red Star should pay VAT = output tax - input tax = 1000 ÷ (1 + 17%) * 17% - 85 = 603,000 yuan. Urban maintenance and construction tax and education surcharge payable = 603*(7%+3%) = 60,300,000 yuan. Stamp duty payable = 1,000*3÷10,000 = 0.3 million yuan. Red Star's profit = 1000 ÷ (1 + 17%) - 500 - 60,300 - 0.3 = 3,483,700 yuan.
In the case of Option 2, the turnover = 800 + 200 - 585 = 4.15 million yuan (the full price and residual value charged by the lessor - the actual cost borne by the lessor). Turnover tax payable = 415*5% = 207,500 yuan. Urban maintenance and construction tax and education surcharge payable = 20.75*(7%+3%) = 20.08 million yuan. Profit of Red Star = 415-20.75-2.08 = 3,921,700 yuan.
Therefore, Red Star chose Option 2 to carry out SME financial leasing business.
But the tax department after inspection but found that the red star company suspected of tax evasion, and asked to pay back taxes and the corresponding amount of late fees. The basis is: the People's Bank of China approved the operation of small and medium-sized enterprise financial leasing business units engaged in small and medium-sized enterprise financial leasing business, regardless of whether the ownership of the subject matter is transferred to the lessee, should be in accordance with the "People's Republic of China * * * and the State Business Tax Provisional Regulations" of the relevant provisions of the levy of business tax, according to the "financial industry - small and medium-sized enterprise financial leasing industry" levied. The business tax shall be levied according to the relevant provisions of the Provisional Regulations on Business Tax of the People's Republic of China. Other units if the ownership of the subject matter has not been transferred to collect business tax, is the "service industry - leasing industry" business tax. Turnover = 8 million yuan; payable business tax = 800 * 5% = 40,000 yuan; payable stamp duty = 800 ÷ 1,000 = 0.8 million yuan; payable urban maintenance and construction tax and education surcharge = 40 * (7% + 3%) = 40,000 yuan. Red Star's profit = 800-44-0.8-585+2 million yuan = 3.702 million yuan. Evasion of sales tax 19.25 (40-20.75), evasion of urban construction and education surcharge 1.92 (4-2.08), and days of late payment of taxes plus five ten thousandths of the late fee.
Analysis:
In this case, due to the financial personnel of the Redstar company on the corresponding financial leasing tax laws and regulations of the misuse (whether or not after the People's Bank of China's permission to carry out the small and medium-sized enterprise financial leasing business tax treatment is different, the former is according to the "financial industry - small and medium-sized enterprise financial leasing industry", the former is the "financial industry - small and medium-sized enterprise financial leasing industry". The former is the business tax levied according to "financial industry - small and medium-sized enterprise financial leasing industry", and the latter is the business tax levied according to "service industry - leasing industry"), which led to the failure of the business planning. The business tax and stamp duty processing errors, so that enterprises are not only caught in the situation of tax evasion, the loss of integrity and public relations image, but also have to pay much higher than the bank interest on demand deposits late fees.
Small and medium-sized enterprises (SMEs) occupy a special position in China's economy and play a special role. Many SMEs' financing channels have not yet been included in the supervision of the financial industry, and various policies and regulations on SMEs are not perfect. In such an awkward transition period, it is necessary to carry out all kinds of SMEs' financing business with particular caution, and both financing parties should understand the nature of their own enterprises and the overall financial situation. Both financing parties should understand the nature of their enterprises and the overall financial situation, and in addition, in general, they should comply with specific national laws and regulations. The purpose of tax planning is to reduce taxes in a reasonable and legal manner, but in practice it is easy to be confused with tax evasion and tax avoidance, so it is necessary to strictly comply with the relevant provisions of tax laws and regulations in the planning process.
Secondly, enterprises should pay attention to cultivating tax talents. The tax laws and regulations are comprehensive and complex, and the SME financing business itself is more complicated and complex, so it is necessary for enterprises to cultivate specialized tax talents.
Growing Venture Capital
Case Background:
Softbank Venture Capital Corporation (SBCVC) has recently signed a strategic cooperation agreement with HengHui Technology Corporation, completing its first round of investment. SBCVC has invested tens of millions of dollars in HWT in the first phase of its investment, helping it to further expand its presence in China's hidden orthodontic market.
Softbank Venture Capital Corporation (SBCVC) is an internationally recognized venture capital fund. SBCVC is committed to helping outstanding entrepreneurs*** in China (including Hong Kong, Macau and Taiwan) create world-class leading companies. We invest in companies with high growth potential in a wide range of industries including IT, clean energy, healthcare, new materials, consumer and retail. Investment stages include early stage, growth stage and late stage. Softbank's successful investments in China include. Companies include Alibaba, Taobao, Focus Media, Hangzhou Dean, Good Doctor, Comet Bio and Suzhou Naton.
HengHui Technology is committed to the research, development and industrialization of digital dental technology, and is an international leader in many fields, including new materials, ultra-precision machining, large-scale personalized automated production, and computer graphic image technology. The third generation of bracketless invisible orthodontic technology pioneered by HengHui Technology is currently the most advanced bracketless invisible orthodontic system with the best clinical results in the world. Its core product (iRok) invisible orthodontic treatment has independent intellectual property rights and a number of application patents, which has been widely praised by orthodontists in various countries through 5 years of clinical use in the United States, Asian countries, Hong Kong, Macao and mainland China.
Song Anlan, Managing Partner of Softbank China, believes that digital technology is the future development direction of the dental healthcare industry and has a broad market prospect. HWT now has world-leading technology, diversified product lines, professional and flexible software systems, strong R&D and technology conversion capabilities, as well as rich production, service and marketing experience in the invisible orthodontic market. With the capital support from Softbank China, HWT has a great opportunity to become a rising star in dental medical equipment.
Mr. Liu Zhenhuan, President of HengHui Technology, said that the company has built an industry-leading digital dental technology through years of hard work. With Softbank's resources in the global capital market, combined with HengHui's digital dental technology and dental marketing network, HengHui Technology will launch the digital oral healthcare market with huge potential, provide better products and services to domestic and international customers, and bring health and more charming smiles to the Chinese people.
Analysis:
From the materials, we can see that the company that received the financing, HengHui Technology, has industry-leading digital oral technology, diversified product lines, professional and flexible software systems, strong R & D and technology conversion capabilities, as well as a wealth of experience in the invisible orthodontic market in the production, service and marketing, has its own strong Softbank Venture Capital Ltd. has decided to invest in the company precisely because it sees the development potential of the company in this field. In other words, VCs (not only SBC) are committed to helping innovative companies with strong growth potential to reach the next level, rather than simply "helping the poor", as they also pursue the principle of profit maximization. In the early stage of SMEs' entrepreneurship, enterprises have not yet formed a scale, facing the lack of capital, technology, information and many other difficulties, this stage of the enterprise is most in need of systematic professional support, experience and resources including financial support, optimization of the business model and profitability model, the attraction of talented people, the establishment of a modern enterprise system, the search for strategic partners, capital operations (including IPOs, mergers and acquisitions and restructuring, etc.), which is also known as Venture capital as the main service. However, due to the interest drive and risk considerations, VCIs are currently focusing on investing in mature enterprises and enterprises with high potential, and seldom invest in start-up SMEs.
In fact, in the early stages of growth, companies often get funding from angel funds, which is in line with the pattern of demand for different financing methods at different stages of growth. But angel funds are also more favorable to high-growth science and technology project enterprises, they are mainly for the budding SMEs to provide "seed money", is the face of the most benevolent venture capital.
In addition, the SMEs supported by venture capital firms are typically disadvantaged, and it is often difficult to protect their own rights and interests, so it is necessary for the government to support them with certain policies. First of all, the government should adopt certain financial support policies to encourage the use of social capital in accordance with market principles of operation of venture capital enterprises; secondly, to solve the problem of double taxation of venture capital enterprises, and improve a series of preferential support policies. At the same time, the approach will also improve the corporatization level of venture capital enterprises. Finally, specific laws and regulations should be formulated to address the various forms of VC legal protection and legal regulation.
Measures to solve the financing difficulties of small and medium-sized enterprises
Using private capital to solve private problems
In Wenzhou, there is a kind of association called "folk mutual aid society", which is generally composed of a head and ten members. Ten members, with each member contributing 5,000 yuan, for example, will be able to raise 50,000 yuan of funds, the money will be used according to the agreed time in the flow of the various members of the use of funds, the first use of funds for members to pay the agreed interest to other members, once the middle of which members can not pay the money, the head of the responsibility for him to advance, accordingly, the chairman of the first to enjoy the right to use the money without interest. In Cangnan County, Jinxiang Township reporter learned of another way of private fund-raising, that is, the upgraded version of the mutual aid society - the standard will be (: "We do not use the money in order, but everyone out of the bidding, everyone is willing to pay their own interest is written on a small piece of paper, and then opened to see who is out of the interest! most is the first to use the money.") .
Civilian mutual aid societies are the equivalent of a zero-deposit concept, where members can raise money in a short period of time when they need it urgently. For the owner, the equivalent of installments without interest; for the last member to withdraw money, the equivalent of saving money to get interest, of course, the interest rate according to the other members before the number of advance per cycle and different changes. The normal operation of this whole activity is still based on the credibility of the owners and members of the mutual aid society, if this period, someone absconded with the money, then the other members will also suffer losses.
In addition, as mentioned earlier, microfinance companies are also utilizing private capital to solve the problem of SME financing, although they all have certain flaws, but they are on the road to continuous improvement.
Self-improvement and improvement of small and medium-sized enterprises
SMEs business itself has some unique advantages: First, small and medium-sized enterprises market resources, development potential; Second, the geographical and industrial distribution of the more dispersed, you can effectively reduce the risk of concentration; Third, the demand for financing to the short-term credit products are mainly conducive to the adjustment of bank Third, the financing demand is mainly for short-term credit products, which is conducive to the adjustment of the asset structure of the bank to improve the liquidity of funds; Fourth, the bank is more likely to implement the risk of pricing, can be reasonable loan pricing to achieve a higher return. Small and medium-sized enterprises (SMEs) are the most vibrant and dynamic economies in the market economy, and often take the lead in recovering from economic crises and will have greater development.
SMEs should make full use of various opportunities and advantages in the development process, and strive to improve themselves, as the familiar saying goes: the one who will not abandon himself the most is himself. The enterprise's own ability to improve, access to financing opportunities are more, the conditions are more convenient, of course, also more able to make themselves stronger, so that a virtuous circle, but also can be considered a real solution to the problem of SMEs financing difficulties.
Problems and causes of SME financing
The main problem of SME financing is that it is difficult to finance, it is difficult to get a loan from the bank, the threshold of direct financing is too high for SMEs, and absorbing capital from the private sector is costly and risky, and there are also the imperfections of laws and regulations in China, which have the potential of financial risks. The reasons for such a situation are mainly the following.
(a) the limitations of the development of small and medium-sized enterprises themselves. According to statistics, China's small and medium-sized enterprises have a shorter life expectancy, the current average life expectancy is only 3.7 years, and 80% of small and medium-sized enterprises are family-owned enterprises, only less than 15% of the development of the better family-owned enterprises in the third generation can still survive. SMEs are such a short-lived flash in the pan that it makes sense for banks to be shy about lending, and banks have to reduce risk for their own benefit. Most small and medium-sized enterprises do not pay attention to business management, financial systems are not sound, the direction of development and financial control of enterprises are often manipulated in the hands of individuals, the transparency of enterprises is low.
(ii) There is no sound service system and lack of support from government functions. The Small and Medium Enterprises Administration (SMEA) is a specialized agency responsible for the comprehensive coordination, guidance and services for small and medium enterprises (SMEs), proposing policy measures to promote the development of SMEs, guiding the development of entrepreneurship and innovation in SMEs, and providing financing guarantees and other services for SMEs development. In some developed countries, the Small and Medium Enterprises Administration has provided great help for the development of small and medium-sized enterprises and promoted the rapid development of small and medium-sized enterprises.
(C) the reasons of the banks. According to statistics, China's state-owned enterprises accounted for less than 30% of the gross industrial product, less than 15% of the GNP, but accounted for 70% of the bank loans, and small and medium-sized enterprises are very difficult to get loans from the bank, which is mainly due to the system in China. If a loan is given to a state-owned enterprise and the assets cannot be recovered, the non-performing loan can be given to an asset management company through a policy of divestment, but if a loan to a small or medium-sized enterprise cannot be recovered, the person concerned should be held responsible. And most of China's small and medium-sized enterprises belong to the family business, management is not standardized, the financial system, the property rights system is not sound, can mortgage assets are not much, the risk of operating increased, the lack of credit guarantee, the financial institutions in order to their own interests, the small and medium-sized enterprises of the loan audit is strict, and often do not meet the requirements of the conditions, it is very difficult to loan success.
(d) The legal system is not sound. SMEs financing difficulties, development constraints, the government in order to support small and medium-sized enterprises, the successive introduction of a series of laws and regulations to protect the development of small and medium-sized enterprises, such as the "Small and Medium-sized Enterprise Investment Law", "Small and Medium-sized Enterprise Standard", "Small and Medium-sized Enterprise Development Fund Establishment and Management Methods", "Small and Medium-sized Enterprise Credit Guarantee Management Methods" and so on, these although the development of small and medium-sized enterprises in terms of the law, financing provides a favorable Although these laws provide favorable conditions for the development and financing of small and medium-sized enterprises, some of the systems are still unsound and do not provide substantive measures, especially for direct financing does not give a model in line with China's national conditions.
Countermeasures
(a) Establishment of sound laws and regulations to ensure the smooth financing of SMEs. In order to promote the development of small and medium-sized enterprises, the state should introduce appropriate laws and regulations to ensure the smooth financing of small and medium-sized enterprises. First, the state should introduce relevant regulations to improve and optimize the structure of the capital market, there is the establishment of a multi-level market system, especially for small and medium-sized enterprises direct financing of the market, we must really reduce the threshold of small and medium-sized enterprises to issue and listings, the procedures should be simplified, the service should be in place to improve the efficiency of the work. Secondly, the government should improve the social credit system, and while providing good services to SMEs, it should also resist debt evasion, remove the obstacles to lending between SMEs and banks, and reduce financial risks. In some developed countries, in order to promote the development of small and medium-sized enterprises, have established a variety of laws and regulations to ensure the smooth financing of small and medium-sized enterprises, such as in South Korea, the promulgation and implementation of the Small and Medium-sized Enterprises Support Act, and the establishment of the "Small and Medium-sized Enterprises Entrepreneurship Revitalization Fund" and the "Small and Medium-sized Enterprises * * * Business Fund For example, in Korea, the SME Support Act was enacted and implemented, and the SME Venture Revitalization Fund and the SME **** Economic Business Fund were also established to support the development of SMEs. China's support for small and medium-sized enterprises started late, we should learn from the experience of developed countries, improve the construction of laws and regulations to promote the healthy development of small and medium-sized enterprises.
(2) The functional departments should strengthen the division of labor. For small and medium-sized enterprises to manage the functional departments have township and village enterprises, industrial and commercial administration, science and technology commission, small and medium-sized enterprises division and small and medium-sized enterprises office, these departments have different functions, all of them are interfering with the enterprise, this kind of multi-headed leadership model, not only low efficiency, conflict between functions, but also cause a waste of resources, and each other to shirk their responsibilities, affecting the development of the enterprise. The government should sort out the adjustment of the management organization, so that they are coordinated, *** with the promotion of the development of enterprises.
(C) Reduce the threshold of bank lending. In order to promote the development of small and medium-sized enterprises, the state policy financial institutions should adopt as many forms as possible to provide services for enterprises. 2006, in order to improve the operability of commercial banks to implement credit support for small and medium-sized enterprises, the China Banking Regulatory Commission issued the "Due Diligence Guidelines for Commercial Banks' Credit Work for Small Enterprises (for Trial Implementation)", which stipulates that small and medium-sized enterprises are to be differentiated from the management of large customers, especially for small enterprises. Small credit, commercial banks can, according to the actual situation, simplify the procedures and appropriately expand the authorization of the account manager, which makes the small and medium-sized enterprises in the bank loans have more room for maneuver. 2008, issued the "Guidelines on the Pilot of Small Loan Companies," which increased the coverage of services and the number of customers.
(d) Increase financing channels. In order to raise funds, financing channels can be widely opened. Private finance has a long history in China, but also a more convenient form of financing. For example, most of the funds of small and medium-sized enterprises in Wenzhou, Zhejiang Province come from private finance. Flexible forms of private finance, low transaction costs, simple procedures, you can quickly raise the funds needed, but private finance also has risks, the state should formulate laws and regulations to regulate the private financial market, to encourage the development of private financial institutions at multiple levels, and actively utilize private financial resources to promote the rapid development of small and medium-sized enterprises.
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