Introduction 3
1 Some important financing sources for SMEs 4
1.1 Different stages in raising finance 4
1.2 Venture Capital: a light of hope for the SMEs 5
1.3 Leasing and Factoring: special survival skills 7
2 Difficulties for SMEs in raising finance 8
2.1 Biggest trouble: lack of credit records 8
2.2 Capital constraints 9
2.3 Other barriers 10
3 Conclusion 10
Reference 11
Explain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficulties in raising finance
Abstract: This article examines which types of finance are more suitable for the SMEs, also analysing the disadvantages on them when raising finance. Unlike the large companies, SMEs have difficulties in getting enough money to develop. SMEs are more likely focused on the Venture Capital and some informal finance, such as Business Angel Financing and relationship lending. Also the special tools, like leasing and factoring, are quite useful when they suffering financial troubles. Difficulties in raising finance are numerous, for instance, the policy of the government and legal protections, but sometimes ownership might be a barrier, as well as the credit information sharing.
Key words: SMEs, Raising Finance, Venture Capital, Barriers
Introduction
For a long time, small or medium-sized enterprises(SMEs) have played important roles in the development of national economy construction. And lots of research have been set up to look for the solution for the SMEs in raising finance. Putting so much efforts on SMEs based on two reasons: on one hand, SMEs are the engine of economic development; on the other hand, banks and some institutions fail to invest SMEs which will impede their growth in the society, and will constrain the development of society.(Beck, 2006) SMEs have been defined in various ways, and lots of the definitions include the number of employees, the investors, the suppliers and most