Why Are Private Financing So Active And Rising?

Small and medium-sized shoe-making enterprises "financing difficulties" has become a widespread problem. At present, coupled with tight money, banks have stopped lending business, and small and medium-sized enterprises are hard to obtain financing from banks.

They are generally faced with tight financing environment and relatively tight funds. Even if there are mortgages such as real estate and real estate, banks also make strict demands.

In the face of the closure of the bank loan door, many small and medium-sized shoemaking enterprises have turned to private financing.

Private financing has also gone up.

For a long time, private financing has been regarded as "underground bank" and has been used to "usury" and "illegality".

However, due to the strong demand of diversified markets, private financing is very active everywhere.

According to statistics, the scale of private financing has reached 1 trillion yuan.

Is private financing a useful supplement to diversified economic development, or is it a "scourge" that disrupts the normal financial order?

Is the advantage outweighed the disadvantages or the disadvantages outweigh the advantages?

Is it "sparse" or "blocking"?

Why is private financing so active and "rising"?

First, small and medium-sized, private and high-risk enterprises have difficulty in obtaining loans, providing alternative opportunities for private financing.

Therefore, these enterprises looking for "rice" have to turn their attention to private financing.

Private capital has become a substitute for bank funds.

Coupled with the "simple and fast" procedure of private financing, it objectively adapts to the characteristics of capital demand of these enterprises.

The two is the shrinking of formal financial loans, which provides an opportunity for private financing to borrow.

With the deepening of commercialization reform of state-owned banks and the rectification of non banking financial institutions, the threshold and share of loans for small and medium-sized shoemaking enterprises have been raised.

As a result, private financing has developed rapidly and has been unprecedentedly active.

The three is driven by interests. The imbalance between supply and demand of funds gives investors a lucrative opportunity.

Profit seeking is the nature of capital.

Under the background of financial regulation, idle funds have been flowing to private financing, which is relative to bank deposits, and many people are making huge profits.

At present, the status quo of private financing, 1, the diversification of private lending methods, from the survey, most of the people who participated in private lending in the past lived poorer, but now most of the people who are involved in private lending are wealthy businessmen and business operators. The purpose of borrowing and lending is to focus on life consumption and temporary capital demand in agricultural towns and villages.

The forms of private lending include four main categories: financing among enterprises, financing from enterprises to individuals, and financing between industrial and commercial households.

2, private lending focuses on the traditional values of social relations. The main body of private lending embodies the "information symmetry" of social relations. Most of the private borrowers use financial intermediation, such as "blood ties", "kinship", "geopolitical" and "industry edge", to form a credit guarantee instead of formal financial risk assessment system.

It provides a unique carrier for the flourishing of private lending.

3, private lending unique advantages, private lending can meet the private "short, fast, smart" requirements.

When farmers have the expenses of marriage, funeral, marriage, housing, medical care and education, private lending will become the preferred choice for farmers to meet such financing needs with their unique advantages.

Because most farmers lack effective mortgages, it is difficult to obtain loans from formal financial channels.

Without active private lending in rural areas, rural credit cooperatives can not become commercial entities in the true sense.

4, the interest rate of the private lending market is from the survey. At present, the overall interest rate of private lending is high and rising. The annual interest rate is generally at 7.2%~15%.

In 2006, the interest rate of the private banks increased by 2~5 percentage points compared with the same period last year.

Some individual businesses have relatively short interest rates, relatively high risk and relatively high interest rates. Interest rates are generally different from 15%~30%.

From the survey households, because of the relationship of "kinship", "industry edge" and "geopolitical", only the private lending capital was raised, and the total amount of the households surveyed was 50.38% and 46.50% respectively in the three quarter of 2006 and the fourth quarter.

It is understood that in addition to family and friends' loans, the current private financing market interest rates are higher and higher, most of them are higher than the National Bank's benchmark interest rate lending rate.

5. On the basis of the original civilian research and monitoring points, we chose to investigate a number of private financing enterprises and self-employed households.

The financing way is to borrow and finance through relatives, friends, employees and various industries.

Due to different financing periods, interest rates are generally different from 7.2%~30%, which is used for turnover of working capital.

The financing households reflect the use of private financing in a timely and convenient way. They are worried that there is no financial law and regulations to protect private lending and financing, and there are many risks.

The risk of private financing is that financial regulation is difficult to involve and financial risks are latent.

The existence of private financing makes a large number of funds circulate outside the company for a long time.

Adventure, speculation, concealer and black box operations often result in varying degrees of damage to the normal financial order with private financing and lending.

The two is the neglect of norms, which is a potential threat to social stability.

Private financing is arbitrarily large and poorly regulated. Many of them belong to gentlemen's agreement and often cause civil, economic disputes or litigation cases.

Three, private high interest financing, so that households can not be overburdened.

In the range of conventional interest, private financing is a pmission to small and medium enterprises, especially "short and fast" projects.

But high interest rate or even high interest rate is no more than inducing poison to quench thirst.

This is what people joke about: usury is more harmful than tiger.

Especially those underground illegal fund-raising between the same region or acquaintances, the operators are not extravagant, unable to pay too much, or run away from the money to make creditors lose their money.

This deterioration of private financing has greater risks and hazards.

Through the survey of private lending and financing, we find that the private financial system needs new breakthroughs.

Private financing has become an important part of social financing. In the face of the vigorous development of private financing, government departments should not ignore the existence of private financing, carry out objective research and analysis, and make policy adjustments in a timely manner.

Facing the reality of the huge scale of private finance and the difficulty of financing non-public economy, the state should adjust its policy orientation in time.

First of all, we must clearly define the boundaries between financing and illegal financing, and give the legal status of private financing.

Secondly, we should appropriately adjust the standard of access to banks' equity capital, and appropriately increase the proportion of private capital injected into local financial institutions such as urban commercial banks and rural credit cooperatives.

Finally, we should optimize the ecological environment of private finance.

A comprehensive and multi-level service system should be established to provide necessary information services, guarantee services and human resources services for the development of private financing.

For example, we should set up an information service platform for supply and demand of private financing, and encourage the guarantee institutions and the Federation of industry and commerce to form a guarantee system.

At the same time, private financing has been contracted and standardized through legal means.