Abstract: In order to reduce production costs, many manufacturers purchase products from small and medium-sized suppliers. Small and medium-sized suppliers usually can only deliver product orders at a certain delivery level, and the product delivery level of supplier directly affects the production of downstream manufacturers, but this phenomenon has not been paid much attention to by supply chain finance. Therefore, the supplier delivery level and the operation financing of the supply chain are studied, and the supplier delivery level is considered as a decision variable. By studying the optimal operation decision and financing strategy of the suppliers when the suppliers with insufficient funds use the advance payment financing of manufacturer and the equity financing of venture investors respectively, the suppliers’ choice of the two financing methods is finally considered. The results show that the level of self-owned funds of suppliers has a great influence on supply chain equilibrium decision and its benefits. Whether the supplier has sufficient capital or chooses financing, the profit of the supplier is not only related to its own operational efficiency, but also greatly related to the wholesale price of the products of the alternative supplier；When the operating efficiency of the supplier is low, the profit of the supplier increases first and then decreases with the wholesale price of the products of the alternative supplier, and when the supplier operation efficiency is high, the supplier’s profit as the alternative suppliers products wholesale prices increased gradually; When the supplier conducts financing, if the level of self-owned capital is relatively low, it should adopt the method of equity financing; if the level of self-owned capital is relatively high, the supplier should choose the method of advance payment by the manufacturer for financing. If the amount of self-owned funds exceeds the threshold value of funds required by the supplier in case of prepayment financing, the supplier chooses not to finance.

Key words: capital constraint, delivery probability, advance payment financing, equity financing