SMEs and Small Businesses Receive 50 Trillion Won+α Financial Support... 6-Month Maturity Extension Across All Financial Sectors (Comprehensive)

12 Trillion Won Emergency Management Fund Newly Supplied... 1.5% Ultra-Low Interest Rate Applied
Special Guarantee Support of 5.5 Trillion Won Using Supplementary Budget
Issuance of Asset-Backed Securities... 6.7 Trillion Won Planned Over 3 Years
Financial Sector Joint Investment to Establish 'Securities Market Stabilization Fund'

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is announcing the main points at a joint briefing of related ministries following the 1st Emergency Economic Meeting held on the 19th at the Government Seoul Office in Gwanghwamun, Seoul.

[Asia Economy Reporter Kwangho Lee] The government will support small and medium-sized enterprises (SMEs), small business owners, and self-employed individuals with a large-scale livelihood and financial stabilization program totaling more than 50 trillion won in response to the novel coronavirus disease (COVID-19) crisis. In particular, it will provide management stabilization funds at ultra-low interest rates and implement a full extension of principal maturities and interest payment deferrals on loans from all financial sectors for small business owners facing cash flow difficulties.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced the results of the "1st Emergency Economic Meeting" containing these measures on the afternoon of the 19th at the Government Seoul Office.

Deputy Prime Minister Hong stated, "Just as the COVID-19 virus is more fatal to people with weak immunity, economic difficulties hit SMEs, small business owners, and self-employed individuals?who have difficulty raising funds and are smaller in scale?more severely. Until the infectious disease crisis ends and the economy returns to normal, a safety net is needed to help vulnerable economic actors endure the crisis for the time being."

The government will initially establish a large-scale program worth a total of 50 trillion won and will actively respond by expanding it further if necessary depending on the development of the COVID-19 situation.

Considering the funding needs of small business owners, 12 trillion won in emergency management funds will be newly supplied, applying an ultra-low interest rate of about 1.5% to significantly reduce interest burdens. Customized support will be available according to credit rating: ▲Emergency management funds from the Small Enterprise and Market Service (low credit) ▲Ultra-low interest loans from the Korea Development Bank (medium credit) ▲Secondary interest subsidy from commercial banks (high credit).

Additionally, for loans to SMEs and small business owners temporarily facing difficulties, 5.5 trillion won in special guarantees will be supported using supplementary budget resources. For SMEs, guarantee funds will be executed through the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation, and for small business owners, through regional credit guarantee foundations to facilitate prompt loans.

Furthermore, a total of 3 trillion won will be provided as full guarantees for urgent small fund needs of micro small business owners who have suffered direct or indirect damage due to COVID-19. Full 100% guarantees and a 0.5 percentage point reduction in guarantee fees will be applied, and guarantees will be executed quickly through simplified screening focused on a minimal checklist.

At the same time, efforts will be made to alleviate financial burdens on vulnerable groups. The current six-month or longer maturity extensions implemented by some banks and secondary financial institutions will be expanded to all financial sectors and policy-based low-income finance. The interest payment deferral system will also be expanded so that SMEs and small business owners affected by COVID-19 can focus on management without worrying about interest payments.

Moreover, COVID-19 victims will be added to the credit recovery support targets of the Credit Recovery Committee, and preferential support for debt adjustment conditions such as principal payment deferrals and debt reductions will be implemented.

In addition, the bond market stabilization fund will be reactivated to supply liquidity to companies temporarily experiencing funding difficulties. Based on joint investments from banks, securities, and insurance sectors, it will invest in high-quality corporate bonds to provide rapid liquidity support.

To stabilize the corporate bond market and support smooth corporate financing, "COVID-19 Response Bond Collateralized Securities (P-CBO)" will be issued. Including 1.7 trillion won from supplementary budget resources, issuance of 6.7 trillion won over three years will be pursued.

A securities market stabilization fund will be established through joint investments by financial sectors to serve as a safety net for the stock market. It will be operated temporarily until the stock market recovers, investing in market-representative index products to avoid affecting individual stock prices.

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