In recent years, financial institutions have extensively carried out micro-credit business, such as micro-credit loans, student loans, and micro-secured loans for laid-off workers, which have played a positive role in promoting the employment of urban and rural residents and the healthy development of the national economy. However, the development of microfinance business still faces many difficulties and challenges. The author makes the following discussion and analysis on this issue.

First, the development status of microfinance business

Since the pilot project 1993 of "Poverty Alleviation Society" launched by the Institute of Agricultural Development of China Academy of Social Sciences in yi county, the microfinance industry in China has experienced ups and downs for more than ten years. However, due to the imperfectness of the financial system, the immaturity of borrowers and other objective factors, so far, the microfinance business has not achieved exciting practical achievements, which is far from "developing an active and important emerging industry or department" like some successful developing countries. China's microfinance business is developing slowly, which can't keep up with the pace of economic development and can't meet the financial needs of customers.

(1) The loan amount is too small. With the development of economy, the willingness and awareness of urban and rural residents to start their own businesses are getting stronger and stronger, and the demand for funds is also growing. However, due to the limited amount of microfinance business, it is usually unable to meet its capital needs. At present, the loans of commercial banks to laid-off workers are generally 20,000 yuan per person, and in some areas, they are increased to 20,000-50,000 yuan; Some rural credit cooperatives provide small credit loans to farmers with a quota of 0.5-50 thousand yuan. Take the purchase and construction of vegetable greenhouses by farmers as an example. According to the current market price in Linyi, it takes about 60,000-80,000 yuan to build a vegetable greenhouse, plus about 20,000 yuan for labor wages, seeds and fertilizers. From the construction of greenhouse to the start of operation, it needs to invest 80-65.438 million yuan. If credit is granted according to the above limits, there is still a considerable funding gap. Therefore, the loan amount is too small to meet the actual needs of customers.

(2) The loan period is short. Agricultural projects have the characteristics of large investment, slow effect, high risk and long payback period, while the longest term of microfinance business is one year, and the longest term of loans for laid-off workers is only two years. Farmers and laid-off workers generally have no fixed income, which will easily lead to loans overdue, which not only increases the interest burden of borrowers, but also affects their repayment enthusiasm. Moreover, it is not conducive to reflecting the authenticity of loan quality; It is not conducive to financial institutions to rationally arrange funds and improve the efficiency of fund use; It also affects the pertinence and effectiveness of financial decision-making.

(C) Microfinance model is single. The development of microfinance in some areas has not been combined with agricultural industrialization. Because of the asymmetry of information, it is difficult for farmers who have obtained small loans to sell their products, or they cannot guard against market risks and natural disasters, so the efficiency and economic benefits of small loans are greatly reduced.

(D) The construction of the credit system lags behind. In the past few years, due to the low level of electronic construction of financial institutions and the lack of historical credit records, credit investigation only relied on the loan officer's partial understanding of customers, which inevitably led to wrong investigation and insufficient risk estimation. In addition, the financial ecological environment in some areas is relatively poor, and some customers have the idea of evading debts. The quality of pre-loan investigation can be imagined.

⑤ Insufficient sustainability. First of all, the will of local governments is not strong. At the end of 2002, the People's Bank of China issued the Measures for the Administration of Small Guaranteed Loans for Laid-off Workers, which clearly stipulated the object, amount, term, guarantee and interest discount of small secured loans. However, because this policy involves government-funded guarantee and part of interest subsidies, and the amount is small, local governments are not enthusiastic in the implementation process. Secondly, because agriculture is influenced by natural climatic factors and market factors, there are great risks, especially in farming and planting industries, which are often wiped out by natural disasters or market turmoil. In addition, due to the poor accumulation of farmers' funds and weak ability to resist risks, some credit funds are poorly formed and a large number of loans cannot be recovered, which has dampened the enthusiasm of financial institutions to issue small loans. Third, microfinance companies can't absorb public deposits, but rely on external capital injection, lacking sustainable sources of funds, which affects the development of microfinance.