Relevant issues of territories’ small business lending

Small business occupies a special place in countries’ economy due to many factors: small and medium enterprises play an important role in the social and economic development of the state providing employment, competitive environment, middle class formation and economic stability. Its success sufficiently depends on entrepreneurs’ long-term and short-term financial resource security. Insufficient financing is one of the main problems faced by Russian entrepreneurs operating on the local market. Amid the inability to meet the requirements of the banking system current and potential entrepreneurs experience the need to define the main areas of improving the mechanism of bank crediting of small and medium business entities. In this regard, the purpose for the present article is to analyze the trends of lending of subjects of small and medium business of territories to determine the main ways to increase its effectiveness. In order to achieve this goal, the article reviews the foreign and domestic experience in financial incentives for small and medium enterprises; conducts comparative analysis of performance of lending funds to small and medium enterprises and indicators of their functioning. Based on interim analysis and research results of Russian researchers it was possible to identify the main causes of current trends as well as the key challenges and solutions aimed at stimulating bank lending of small and medium enterprises. Their implementation will help intensify the activity of the economic sector under review and increase the level of socio-economic development of local territories and the country as a whole. The main research result is that the author has determined the need to establish an appropriate mechanism to stimulate bank lending to business entities by state authorities and management. The article can be used by federal and regional authorities and administration for designing the strategy for further development of the economic sector under study. The author’s further research will be focused on the development of an appropriate mechanism of state incentives for bank lending of small and medium business entities, which would help solve the identified problems with the aim of improving the key indicators of small business fucntioning.