Private lending provides a new channel for small and medium-sized enterprises to obtain financing and is an important force to promote the development of small and medium-sized enterprises. However, we should also realize that there is a large gap in the supervision of private lending, and if it is not controlled, its negative impact will also damage people's property and personal safety, so we should guide and regulate private lending, actively introduce relevant laws and regulations, and establish a multi-level and diversified system for the financing of small and medium-sized enterprises, which has a very positive impact on ensuring the healthy and stable growth of small and medium-sized enterprises.

◆ Improve laws and regulations related to private lending

Improving laws and regulations on private lending will help resolve disputes over private lending activities and maintain social harmony and stability. In the future, China needs to speed up the research and formulation of laws and regulations on private lending, so that it can achieve synergy and linkage with banks and other formal financial institutions.

First of all, the relevant government departments should affirm the legal status of private lending, actively carry out activities to popularize the law on private lending, and guide the public to learn relevant financial theoretical knowledge and laws and regulations.

Second, China has brought private lending into the orbit of the rule of law. Therefore, in the future, China needs to invest more resources in the construction of private lending laws and regulations, so that private lending entities can obtain their due legal status, and build a fair, just and open legal activity platform for them to protect their legitimate rights and interests.

Finally, China should severely crack down on money laundering, usury, underground banks, illegal fund-raising, and other illegal and criminal financial activities, strengthen the ability to supervise and control private lending activities, standardize and contract private lending, make full use of private capital, and provide a good environment for small and medium-sized enterprises to raise funds.

◆ Strengthen the supervision of private lending

In the context of the lack of laws on the regulation of private lending, the relevant institutions can temporarily use the regulatory system of commercial banks when supervising private lending. The risk of private lending with high interest rates is also relatively high, so it is necessary to strengthen supervision and understand the use of borrowers' funds. For example, loans between relatives and friends should be less or even non-interventional, and only provide a channel for rights protection when disputes arise between the two parties. There are indeed certain risks in the internal fundraising activities of small and medium-sized enterprises, but they are also an important way to promote the rapid development of small and medium-sized enterprises. In order to reduce the risk, the relevant departments can strengthen the supervision in advance.

For private financial supervision, private indirect financing activities with the participation of intermediary organizations are the key regulatory content. If left unregulated, such financing activities often have a very negative social impact when they go wrong. In addition, financially active areas need to invest more regulatory resources, introduce advanced technology, equipment and systems, and gradually establish a nationwide financial testing system to fully grasp the operation of private finance.

◆ Guide the flow of private lending funds

To solve the problem of financing difficulties for small and medium-sized enterprises, it is not only necessary to reform banks and other formal financial institutions, but also to make full use of private lending, scientifically guide private capital, make it serve the financing needs of small and medium-sized enterprises, and promote the standardization of private lending. For example, for high-polluting industries, the state has set a high threshold for the financing activities of relevant enterprises, but a large number of private lending organizations provide low-threshold financing channels for high-polluting enterprises, which is not conducive to the green and healthy development of China's economy.

Therefore, China should guide and standardize private lending, expand the scope of supervision, increase the intensity of supervision, severely punish usury, illegal fund-raising, etc., and at the same time appropriately relax the financing restrictions on small and medium-sized enterprises, require the financing amount to reach a certain scale of private lending behavior for the record, through the formal financial institution supervision system to supervise large-scale private lending organizations, to prevent money laundering, underground money banks and other financial illegal and criminal activities caused by systemic risks.

◆ Broaden financing channels for small and medium-sized enterprises

In order to solve this problem, small and medium-sized enterprises should improve their own management level, improve enterprise rules and regulations, regularly publish business data, and improve the credibility of enterprises.

The government should broaden the financing channels for small and medium-sized enterprises, so that small and medium-sized enterprises can use banks and other formal financial institutions to raise funds through private loans. At the same time, the government should support and encourage private guarantee funds, cultivate a number of private credit guarantee institutions with standardized management and good performance, give full play to their exemplary role, and provide a strong impetus for the healthy and orderly development of the private lending industry.

China should actively promote the reform of the financial system, encourage the development of emerging formats such as Internet finance, give more support to small and medium-sized enterprises in terms of coverage and total amount, and change the "one-size-fits-all" management strategy in the field of private investment. Banks should be fully aware of the positioning of their intermediary role, provide docking services for both private lenders and borrowers, grasp the overall situation of private lending in real time, and actively develop personal entrusted loan business, provide diversified investment channels for the public, reduce capital risks, and provide financial support for small and medium-sized enterprises.

◆ Establish a pricing mechanism for private lending interest rates

Interest rates on private lending activities are generally high, and usury occurs from time to time. The problem of usury in private lending has had a relatively serious negative impact on the stable development of the economy and society. Private lending has formed a relatively complete industrial chain, organized private lending institutions are in a strong position, the risk is relatively low, and the legitimate rights and interests of small and medium-sized enterprises that lend to them are not effectively protected. Therefore, it is particularly important to control the interest rate of private lending and improve the pricing mechanism of private lending interest rate.

Private lending provides an effective way to solve the financing difficulties of small and medium-sized enterprises, but its negative impact cannot be ignored. Therefore, promoting the healthy and stable development of private lending, strengthening the supervision of private lending, guiding the standardization and contractualization of private investment, and broadening the financing channels of small and medium-sized enterprises should become an important task of China's financial reform.