Abstract: Abstract: As a new banking service, the supply chain financing is an effective preliminary tool to marketization small and medium-sized enterprises’ financing. In accordance withthe cooperation between enterprisesof a supply chain, a model of risk-free returns contracts between different entities in asupply chain is built. Based on the model, the loan limit and its highest interest rate agreed upon by both the bank and the enterprises is investigated, the circumstances under which a risk-free contract can be signed among constituents in the supply chain is analyzed, and the incentive relations among enterprises’ effort levels, the interest rate of loan and the loan limit are propoded. Research findings indicate that as the source of loan repayment, the future economic returns of a supply chain project are pertinent to not only the original state of the project, but also the effort levels of the constitutive enterprises, whose joint efforts are the guarantee of the total benefit of the supply chain, hence the corporate earnings could be maximized.

Key words: supply chain financing, credit risk, enterprise return, contract