Small and medium-sized enterprises (SMEs) in China face challenges in getting financing, which hinders their growth. To help SMEs improve their financial situation and compete better, it is important to optimize their financing structure. The main issues with SME financing include having an unbalanced mix of equity and debt, unreasonable debt structures, low internal financing, and limited financing methods. By adjusting the equity-debt ratio, maintaining flexible capital structures, learning from international financing practices, and innovating financing methods, SMEs can enhance their financial efficiency and competitiveness in the market.