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With the development of information technology, E-business becomes the core competition of small and medium enterprises in recent years. In this paper, we make an empirical test to analyze how the application of E-business will effect on the business performance. The result shows that the E-business application index increased 1 percentage can drive sales volume increased by 0.22 percentages, so the effect of E-business to SMEs' business performance is obvious. From Johnson co-integration test, the result shows that there exist at least one direct co-integration relationship between E-business application and sales volume, which means that there exist a long-term equilibrium relationship between E-business application and sales volume in SMEs.

Evaluation of E-commerce Performance in SMEs based on Vector Auto Regression Model