Additional 1.2 Trillion Won Support for SMEs Affected by COVID-19... Expansion of Bank Delegation for Loan Services

[Asia Economy Reporter Kim Hyo-jin] The government will provide an additional 1.2 trillion won in financial support to small and medium-sized enterprises (SMEs) affected by the spread of the novel coronavirus infection (COVID-19). In addition, in response to concerns that the guarantee-backed loan procedures of regional credit guarantee foundations are delayed, the scope of tasks entrusted to banks will be expanded to speed up the loan process.

According to financial authorities on the 10th, based on the supplementary budget for COVID-19 response, the government plans to newly support 700 billion won worth of special guarantees for SMEs affected by COVID-19. The support scale for new issuance of company bond-backed securities (P-CBO), which helps SMEs and mid-sized companies raise funds, will also increase by 500 billion won from the initially planned 1.7 trillion won to 2.2 trillion won.

This reflects field opinions that SME support programs are relatively insufficient compared to support for small business owners. The government also plans to promptly execute a 4.5 trillion won facility investment boom-up program and a 3 trillion won industrial structure advancement program as much as possible.

Regarding concerns that 70-90% of funding applications from COVID-19 affected companies are concentrated on guarantee-backed loans from regional credit guarantee foundations, causing delays in guarantee screening, financial authorities decided to expand the current scope of bank-entrusted tasks such as loan document reception, preparation guidance, and on-site inspections, and to deploy retired personnel from policy financial institutions to assist.

Furthermore, financial authorities will continuously encourage frontline branches by preparing and delivering guidelines for relaxed credit screening at headquarters to ensure smooth financial support from private financial companies to COVID-19 affected SMEs and small business owners.

This includes measures such as determining interest rates and limits based on a 'three-level' credit rating upgrade and uniformly extending the maturity of loans due within four months by six months without screening, with branch manager approval as the principle (as in the case of Shinhan Bank).

From March 3 to 6, financial authorities conducted telephone checks on the execution status of financial support for COVID-19 damage with policy financial institutions such as IBK Industrial Bank, Korea Credit Guarantee Fund, Small Enterprise and Market Service, regional credit guarantee foundations, and private financial companies including KB Kookmin Bank, Woori Bank, Shinhan Bank, Hana Bank, and savings banks.

On the 4th, Financial Services Commission Chairman Eun Sung-soo conducted an on-site inspection at the Gongdeok-dong branch of IBK Industrial Bank, which has a particularly high volume of small business loans, and the Mapo branch of the Korea Credit Guarantee Fund.

According to financial authorities, most financial company branches are actively responding, with dedicated counters and staff performing tasks and headquarters distributing COVID-19 related consultation manuals.

Financial authorities plan to actively disseminate exemplary response cases to other financial companies and swiftly seek various improvement measures through daily emergency meetings and financial sector response review meetings.

Meanwhile, financial authorities announced that after checking the 'Business Continuity Plan (BCP) for maintaining operations' of financial infrastructure institutions and financial companies, they found that alternative workplace operations and remote access system operations are being promptly implemented to respond to emergency situations.

This content was produced with the assistance of AI translation services.