International Business and Management, 2015, 10(2):69 -74. Research on financing of SMEs in PRCsunhuiJilin UniversityAbstract With the rapid development of economy, middle and small-sized enterprises are playing a more and more important role in market economic and become an important part of national economy in our country which is also an active strength in the market. However, the manage environment of middle and small-sized enterprises is not very favorable, specially the problem of financing. The problem of fund shortage is becoming the most serious problem which restricts the development or even threats the survival of middle and small-sized enterprises. This essay is going to analysis the finance theory according to different sizes of business, the financing channels and the present situation of our country small and medium-sized enterprises. It will also start from three aspects which are the policy environment, social and bank and the weakness of middle and small-sized enterprises themselves. In order to find the reason for financing difficulties, it will study the finical system, the credit guarantee system, the information symmetry and the cost of financing, etc. The aim of this essay is to put forward some improvement measures and countermeasures according to the reasons discussed above. Nowadays, our country is in the high-speed economic development stage, if we can not find a better way to deal with small and medium-sized enterprise financing problems, there will have severe negative impact on the economy development in our country. So researching on the problems of small and medium-sized enterprise financing difficulties and finding the solution has practical significance. Key words: Medium-sized and small enterprises; Financing; Bank; Self-construction.Key words: Medium-sized and small enterprises; Financing; Bank; Self-construction1.SMES AND ENTERPRISE FINANCING1.1The Definition of SMEsSMEs mean the companies those who do not have large paid-up capital and also do not hire lots of employees. The United States issued “small enterprises” in regulation: “all owned and operated independently, enterprises are not dominant in an industry that belongs to small businesses.” PRCs national bureau of statistics, ministry of industry and information technology, the national development and reform commission and the ministry of finance jointly issued SMEs type standard notice on June 18, 2011.The notice has been clear that SMEs are divided into three typesmedium, small and micro, according to specific standard enterprise employees, operation income, total assets etc, combining with the characteristics of industry to identify.1.2The Enterprise Financing1.2.1 The Relative Concepts of Enterprise FinancingEnterprise financing refers to the enterprises as the main body in financing activities, effectively raise money through certain financing channels for basic daily activities, according to the requirement of their own. Financing is the first task of enterprise financial management. Whether in the early stage of a new company setting up or in the developing and expanding period of a company, financing problem runs through all the stages. Financing means collect fund directly or indirectly according to the supply and demand in the capital market. Generally, financing refers to a kind of economic behavior that funds flow in the capital market to alleviate the financial stress. Its an interactive process, including input and output of funds. When a certain amount of capital is injected into the corporation, the management will make full use of it. That process make a perfect circle in capital flowing. Normally, enterprise financing can be divided into two common ways: endogenous financing and external financing according to the source of funds. Especially, exogenous financing can be divided into direct financing and indirect financing.1.2.2 Related Theories of Enterprise Financing(1) MM theory. In 1958, Modigliai and Miller put forward in the famous “MM theory” in their classical paper “the cost of capital, corporate finance and investment theory” (Shi, 2001)：Assuming that there is a complete capital market that does not need to pay corporate income tax, the management risks of the enterprise in the market are all the same, only with the difference of capital structure. There arent inevitable relations between the enterprises capital structure and enterprises market value.(2) Balance theory. In the mid-1970s, Myers, Bradley, Frank, and Goyal pointed out the theory of static balance and dynamic balance theory by a lot of research. Simply, the value of the enterprise will not increase as creditors rights financing unlimitedly (Chai, 2011). Because the risks and expenses the enterprises taking are rising as the proportion of debt financing of enterprises rising ceaselessly. The risk of bankruptcy will continue to increase, as well. The income from bonds will be lowe