1. Bank credit
Bank credit, including not only commercial banks, but also policy banks and credit cooperatives, is of course a legal mainstream private financing method. However, on the one hand, China's banking industry has not completely liberalized foreign capital and private enterprises; On the other hand, the reform of state-owned banks is still in progress, and it is common for small and medium-sized enterprises to get loans.
2. Trade financing
Trade financing mainly refers to the accounts payable formed by the credit purchase behavior of enterprises in the trade process. Include direct loan under close management, discount of bank acceptance bills and commercial acceptance bills, transfer of accounts receivable (factoring), international trade finance, etc. The occupation of accounts payable by enterprises is not free, and its cost is manifested in the difference in commodity prices paid in different periods and the liquidated damages for delayed payment. Therefore, trade financing needs the same cost as bank credit.
On the surface, accounts payable is a passive capital occupation accompanied by business activities, rather than an active financing behavior. In fact, in today's increasingly developed commodity economy, accounts payable has long been an active financing behavior of enterprises, and it is also one of the important contents of enterprise financial management. It is precisely because it is difficult for small and medium-sized enterprises in China to borrow money that trade financing is of special significance to them. The so-called "triangular debt" is the direct result of the failure of the normal circulation of trade financing. When it is difficult for some enterprises to raise funds through other channels or the financing cost is too high, they may borrow money from other enterprises that have business relations with them or even have no business relations, pretending to be trade financing to avoid legal restrictions.
3. Private lending
At present, private lending has not been completely legal in China, but at the same time, underground private lending has already reached a considerable scale. In the reality of financing difficulties for small and medium-sized enterprises, many small and medium-sized enterprises have to choose the way of private lending for financing. However, the legitimacy problem not only increases the risk of private lending, but also increases its transaction cost and financing cost.