Risk Control Strategies for Loan of Commercial Banks to Small Agricultural Enterprises

In recent years, the deepening of reform has provided more development space for small agricultural enterprises. Besides, with flexible operation mechanism and sensitive market perception, small agricultural enterprises have also enriched the reform achievements, improved the market structure and promoted economic development. Therefore, attaching great importance to small agricultural enterprises and supporting their healthy development have become the key tasks of each country. However, at the current stage, small agricultural enterprises in China are facing tremendous survival pressure. Because their capital is limited, the capital turnover is difficult. In this situation, financing has become an important means for small agricultural enterprises to revitalize the capital chain, expand the scale, and ensure normal operation. Compared with large and medium sized enterprises, small agricultural enterprises are small in size, imperfect in operation system, and weak in the ability of coping with market risks. Thus, commercial banks take on more risks when lending to small agricultural enterprises. To cater to state policies, commercial banks have to loan to small agricultural enterprises. In this process, it is particularly important for commercial banks to control risks. Taking some commercial banks in Xiangyang City of Hubei Province as an example, this paper analyzed the loan contracts provided by commercial banks for small agricultural enterprises and the investigation of financial status and credit status of loans before and after lending. It is found that commercial banks seldom check the financial statements when checking the operation status of small agricultural enterprises. They just check electricity fees, water fees, and wages, which are real-time and provided by the authority to accurately grasp the operation conditions. It has also been found that commercial banks will ensure that enterprises can possess the capital flow to reduce loan risks through requiring enterprises to set up fund withdraw accounts, and taking accounts receivable of enterprises as pledges.