Smes' Available Financial Source and Why It Is Difficult to Be Raised?
SMEs ' available financial source and why it is difficult to be raised?
Module code: ULMS767
Name: Yi Jiang
Student ID: 200893869
November 19, 2012
Supervisor: David Brookfield
SMEs ' available financial source and why it is difficult to be raised?
Abstract
This paper will have a brief introduction of what kind of financial sources are available for small or medium-sized enterprises (SMEs). Moreover, these sources have been categorised as 3 different types, namely, first, Self-Raised ability; second, loan from bankers; third, support from government and local authorities. All these three type of sources are very important for SMEs. The difficulties of raising finance for SMEs have been analysed in this article. In addition, the bankers lending criteria shows it is very difficult for SMEs to get funding compare to those big firms. At the end of this paper, the success story of Chinese SMEs shows the importance of government and local authorities in helping them raising fund.
The source of finance available for SMEs
The source of finance for SMEs varies from different countries. To start a small business, basic fund need to be raised. The start fund can be raised by different ways. Take China as an example, domestic bank loans are more effective for bigger firms, while self-raised finance is more beneficial to smaller firms’ growth (Du & Girma, 2012). Due to the fact that the financial system was at a very early stage, thus it could not provide fund for those who want to start business. However, in some western countries where the financial system more advanced than those developing countries, start fund for SMEs can be raised by angel investment. Business angels can make a significant contribution to the financing of business start-ups (Brettel, 2003). This means in some countries like the Unite Kingdom, Germany etc., there will be more opportunities for people getting basic fund to start business. When the basic start fund ready for those
Module code: ULMS767
Name: Yi Jiang
Student ID: 200893869
November 19, 2012
Supervisor: David Brookfield
SMEs ' available financial source and why it is difficult to be raised?
Abstract
This paper will have a brief introduction of what kind of financial sources are available for small or medium-sized enterprises (SMEs). Moreover, these sources have been categorised as 3 different types, namely, first, Self-Raised ability; second, loan from bankers; third, support from government and local authorities. All these three type of sources are very important for SMEs. The difficulties of raising finance for SMEs have been analysed in this article. In addition, the bankers lending criteria shows it is very difficult for SMEs to get funding compare to those big firms. At the end of this paper, the success story of Chinese SMEs shows the importance of government and local authorities in helping them raising fund.
The source of finance available for SMEs
The source of finance for SMEs varies from different countries. To start a small business, basic fund need to be raised. The start fund can be raised by different ways. Take China as an example, domestic bank loans are more effective for bigger firms, while self-raised finance is more beneficial to smaller firms’ growth (Du & Girma, 2012). Due to the fact that the financial system was at a very early stage, thus it could not provide fund for those who want to start business. However, in some western countries where the financial system more advanced than those developing countries, start fund for SMEs can be raised by angel investment. Business angels can make a significant contribution to the financing of business start-ups (Brettel, 2003). This means in some countries like the Unite Kingdom, Germany etc., there will be more opportunities for people getting basic fund to start business. When the basic start fund ready for those
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