The existence and efficiency of informal finance and relation credit are illustrated by taking the case of the development of informal finance in Zhejing province and the role of informal finance in Hubei SME development is described.

It is not only the relationship between saving and deposit,but also the relationship between credit and loan,showing a communication relation on the basis of equal value for the banks and enterprises,also showing a totally "mutual glory or mutual failure" relation,and a share equity cooperation relation,etc.

This paper defines the relationship lending and analyzes the value that both partners will obtain in relationship lending,as well as some risks they will be face with,and then analyzes the behaviors of loans exit with game theory.

In the credit market, the commercial banks and the enterprises keep a close relationship in order to communicate information and enhance financing efficiency, which leads to the widespread adoption of relationship lending.

On the basis of the relationship between banks and enterprises, the paper firstly introduces the relationship lending which is the traditional means of foreign bank systems and it s benefits and costs.

The paper provides empirical evidences on the practice of the theory of SMEs\' relationship lending in China and also reveals the application value of SMEs\' relationship lending.

A lot of foreign banking experiences evidence that relationship lending is closely related to SMEs (small and medium-sized firms) financing.