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Small or Medium-Sized Enterprise (SME) Essay

1817 Words8 Pages

Small or medium-sized enterprise (SME), of which definition varies in different countries and different economic development levels, normally is known as relatively small business unit in terms of employees, capital and operations scale in compared with large enterprises in the same industry.

In spite of the diversity of its definition, SME plays a crucial role in almost every economy, tremendously contributes to economic development, job creation, and social stability. According to Popa (2012), it becomes a common place to speak of SMEs as an engine of economic growth for any European Union country. Actually, the saying is not only limited with European Union country, but also works in almost every country, the data from the…show more content…

Financing difficulties has become a common saying of SMEs. The bottle neck of the development of SMEs can easily lead to the instability of the main structure of the economy. Therefore, the financing sources for SMEs and the difficulties they face becomes an internationally concern ranging from developing and developed economies that draws close attention from researchers and policy makers around the globe, numerous studies have been conducted in research areas, and a variety of policies supporting financing measures for SMEs have been taken in different countries.

Currently the main financing sources for SME are bank loans, share holder capital increasing, shareholding transferring, listing in SMEs market, leasing and individual debt.

Besides the commonly known financing sources, the one-line financing is a newly-born micro financing type that works in an online platform, on which studies hardly have been conducted. The modern on-line financing borrowers and lenders seek and match each other through the internet platform, which differs from the traditional meaning that financial institutions launches finance through internet, such as stock. The borrowers publish its projects on the intermediary website platform, which have been audited by the intermediate platform, the money savers (lenders) search the appropriate project to invest, all of the business transactions happen on-line. Many money savers are attracted by the tempting high interest

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