Abstract: An analytic model on effect of commercial banks competition on credit availability of small enterprises was constructed to discuss whether the increase of commercial banks competition degree is favorable for the improvement of credit availability of small enterprises or not. In the model, the cost of switching bank of the enterprise was selected as an index to measure the commercial bank competition degree, and other four factors, i.e., enterprise income on investment projects, probability of success of enterprise projects, cost for advanced capital and differential interest rate set by banks according to the scale of enterprises, were also selected to measure the improvement of credit availability of small enterprises. The research results showed that loan risk of banks increases with the commercial banks competition, the loan to small enterprise ratio decreases, and intensified bank competition is not favorable for the increase of small businesses credit availability. Finally, the case of credit explosion of our country in 2009 was analyzed to verify the effectiveness of the proposed model.