China has some of the biggest banks in the world, but they turned their back on Jacky Wang when his small decorating firm needed a loan. So like many Chinese entrepreneurs, he turned to a pawn shop. Chinese authorities have battled to rein in a massive boom in lending over the past two years, but the credit wave never reached Wang and millions of entrepreneurs like him. "The banks' requirements and threshold are quite high for us. Moreover, they really did not take seriously the amount I need. I felt they were not so keen to help me out," the 40-year-old told AFP. Wang got an order in February and needed 500,000 yuan ($77,000) in working capital to buy materials. He waited in vain for two weeks for a reply to his bank loan application. Time was running out. "Then a friend told me about pawn shops. It turned out to be cost-efficient. It would have been a pity had I lost the order," said Wang, who quickly repaid the two-month loan, using an apartment as collateral. Wang is part of the growing ranks of independent Chinese businessmen who have been forced to look for financing beyond banks, where lending is mainly determined by regulators rather than risk evaluations or market competition. Despite higher fees and interest than what banks charge, sources of private financing such as pawn shop loans, inter-business lending and loan sharks are often more accessible, realistic solutions for small business owners. The number of pawn shops in the world's second-largest economy is expected to rise by more than 10 percent on year to 5,000 in 2011, according to Wu Xianda, chairman of the China Pawn Trade Association. Without the freedom to charge higher interest on riskier loans, China's banking sector, dominated by the "Big Four" state banks, mainly lend to other large state-controlled enterprises and shun small- and medium-sized enterprises (SMEs). Out of 2,000 SMEs interviewed, 41 percent have not obtained any financing from banks while the others face limited funding choices, according to a survey co-conducted by Asia-focused banking group Standard Chartered in 2010. "SMEs had fallen into a paradox whereby they were unable to access financing due to their small size, but were also unable to expand without access to financing," the survey said. In recent years, officials have explicitly pushed banks to channel more money to SMEs. The China Banking Regulatory Commission aims to ensure that growth in such lending in 2011 is no lower than average overall loan growth. The nation's biggest lender, Industrial and Commercial Bank of China, said its loans to SMEs were up 53.3 billion yuan in the first quarter, accounting for more than a third of overall growth in outstanding loans. Despite such figures, some analysts argue in reality the situation has not improved for SMEs and, if anything, has worsened. "There are still financing difficulties for small and medium-sized companies," said Alexander Newman, an assistant professor at Nottingham University Business School China. "A lot of lending... went to state-owned enterprises and large private firms and did not reach more risky, smaller private firms," said Newman, who is based in the eastern city of Ningbo, home to many entrepreneurs. The ongoing credit curbs actually made banks even more reluctant to lend to SMEs, whose deposits are smaller than large companies, the official China Securities Journal said. The central bank this month announced the fifth hike this year in reserve requirement ratio, or the money banks must keep in reserves, which effectively limits the amount of money banks can loan out, as it tries to curb inflation. Banks are also scrambling to increase deposits to meet a stricter loan-to-deposit ratio. China caps this closely-watched measure at 75 percent, meaning loans cannot constitute more than 75 percent of deposits. "Financing is crunched while costs are rising," said Wang Fuming, chairman of Shanghai-based Oriental Pawn, where lending to small businesses accounts for 70 percent of the company's total loans. "You may have been doing a good business, but you will find rents are rising, as are costs spent on suppliers and employees," he said. Wang said pawn shops, unable to take deposits and under heavy restrictions on how much they can lend, cannot always make a difference. "More often than not, we are short of funds too, which means we can only either reject borrowing requests or maybe lend you less than you require," he said.