What is private financing? Reflect on private financing regulations. What is private financing? What are the methods of private financing? What are the risks? Private financing refers to the exchange between investors and recipients, outside the national statutory financial institutions, to obtain high amounts of funds.

Interest and financial behavior that temporarily changes the right to use funds by using private lending, private bill financing, private securities financing, and social fund-raising for the purpose of obtaining the right to use funds and paying the agreed interest.

Private financing is relative to the financing of financial institutions approved by the state in accordance with the law, and generally refers to value transfers and principal and interest payments based on monetary funds between natural persons, enterprises and other economic entities (excluding finance) of non-financial institutions.

Including all forms of finance that are not registered and outside the control of the central bank.

Reflection on Private Financing Regulations In recent years, due to the high threshold for bank loans and relatively strict conditions, most of the financing of small and micro enterprises and the capital needs of self-employed individuals are obtained through informal channels, collectively referred to as private financing.

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Since in the opinion of most scholars in our country, private financing operates outside of government control, the private financing mentioned by the author refers to the financing behavior of "private" funds, which has not been approved by the national financial industry and has no

After registration, and using informal financing methods to engage in financing services, it is a financing activity that cannot be protected in legal procedures.

As a result, a phenomenon has emerged: the funds urgently needed by the private economy are difficult to obtain from banks, and private financing that can provide help in times of crisis is chaotic, with diverse channels and excessive interest rates.

On the one hand, huge amounts of private funds support private enterprises that are in their infancy and development period in accordance with market rules; on the other hand, private enterprises are overwhelmed by the burden of financing, and incidents of running away to evade debts occur from time to time.

Regulatory authorities should actively respond to various risk challenges in the financial field, maintain the bottom line of preventing systemic and regional risks, and achieve the purpose of maintaining national financial security and economic security.

Various methods and risks of private financing (1) Personal loans.

The agreed interest rate is generally 1 to 3% per month. Once the borrower fails to repay the principal and interest on time, violent disputes may easily arise.

For example, being detained by creditors and collecting and extorting debts through various violent means will have a negative impact on normal production and life.

(2) Corporate loans.

There will be situations where companies borrow money at high interest rates to maintain capital turnover, which is just as harmful as personal loans with high interest rates.

(3) Organized private financing.

Including: private banks, private small loan companies, private guarantee companies and P2P online lending platforms that have emerged with the Internet.

In addition, there are also forms of foundation project financing and project development funds.

In these private financings, the borrower usually entrusts a certain institution to raise funds through a certain platform.

The risk is relatively high, and if something goes wrong, it can easily trigger a regional financial crisis.

Disadvantages of private financing (1) Irregular forms of lending.

They appear in the form of IOUs, IOUs, and IOUs. The content of IOUs is simple, which makes it very difficult to hear such cases once they enter the litigation process. It is difficult for creditors to prove the delivery of the loan and the agreement of both parties.

(2) The loan is mixed with illegal debt.

Behaviors such as gambling debts are illegal.

(3) Loans with high interest rates are serious, and the monthly interest rate is relatively common between 1% and 3%.

Since 2015, my country has clearly stipulated that the portion of the annual interest rate less than 24% is protected by law, while the portion of interest exceeding 24% is not protected by law.

So far, the crime of high-interest loans has not been written into our country's criminal law, which has led some people to take risks in order to obtain high interest rates.

(4) There is a false lending relationship.

False loans are usually "cloaked" in the form of private loans and are hidden in form.

The two parties usually collude in advance, summon relatives and friends, and falsely issue IOUs in order to reduce the final repayment ratio of the creditor.

In judicial practice, legal creditors often suffer losses due to the inability to identify the defendant's false lending facts.

(5) Risks in the form of online loans.

P2P lending platforms are originally purely intermediaries, but in reality there is a lack of industry standards, leading to chaos.

Some platforms provide guarantees, some operate fund pools, and some are even suspected of illegally absorbing public deposits and committing fund-raising fraud.

Equity crowdfunding platforms have the problem of incoordination between rapid development and security guarantees, and cannot guarantee the safety of customers' financial assets.

Suggestions for improving relevant legislation (1) Private financing is a private civil activity and should be regulated by civil laws.

Promulgate management regulations specifically targeting private financing.

The current policy orientation is too strong, and private financing often lacks supervision before social problems occur. Administrative controls are only implemented after social problems occur.

(2) Behaviors that violate criminal law should be severely punished.

Although there is no crime of loan sharking in our country, loan sharking and criminal activities that endanger society can still be classified as illegal business crimes.