Small and Medium Sized Scale Enterprise (SMEs) Finance Sources and Difficulties

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Small and medium sized scale enterprise ( SMEs ) occupies the crucial position among the worldwide economic activities, particularly in developing country, whose flourish has already became a sign of the rapid development of economy. However, more than half SMEs face the severe challenges of surviving. Among all the possible threats during business activities, inadequate access to capital is the most important factor to determine the enterprise’s destiny (CCH, Australia, 2013). Even worse, SMEs are under the tremendous stress of the financial and economic crises which lead to the depressed consumer market, contractive loan of financial institutions. Given the important place of SMEs in world economy and the worsening global financial environment, the focus of this article therefore is to identify the utilizable financial resource for SMEs (debt financing, equity finance, Mezzanine finance and venture investment), and analysis the possible difficulties during their financing process.
2. The Available Finance Sources for SMEs
Access to external finance is crucial for business to start up and continue. At the early time to start business, initial owner finance (investment from family or friends) is normally the first resource of finance. Depending on the different human resource network and their economic power, the provided money for borrowers could be diverse. In this section, we will focus on the other external available finance resource for SMEs.
Debt Financing
Bank finance
Bank is the primary choice for SMEs when it comes to financing. ‘Half of SMEs who use at least one form of external finance most commonly use bank funding; either loans, credit cards or overdrafts (SME Finance Monitor, November, 2011).’ Weighi...

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... financer’s enthusiasm.

4. Conclusions
This research summarizes the practical financing avenues for SMEs which illustrates that financial institutions act as an important role to help them get access to their needed financial investment. Although bank is still dominates the traditional financing market, other independent financial institutions and organizations should not be ignored. As the crucial complement of the financial market, their thriving improves the financing situation for SMEs to a large extent when market is constrained by government policy. Furthermore, this article also tries to analyze the possible financing difficulties according to SMEs’ structure, inner and outer environment. To sum up, SMEs should choose the appropriate finance institution or financing method based on their own situation, and associated with the external variation.
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