Financial Services Commission: "Second Round of Small Business Loans Expanded to Regional Banks... Thorough Preparation for Disaster Relief Fund Execution"

Son Byung-du, Vice Chairman of the Financial Services Commission (Photo by Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] The second emergency loan for small business owners to overcome the damage caused by the novel coronavirus infection (COVID-19) will also be available at local bank branches.

Son Byung-doo, Vice Chairman of the Financial Services Commission, announced on the 12th the plan to expand the banks handling the second emergency loan to include local banks. He also urged the financial sector to thoroughly prepare to ensure that the government's emergency disaster relief funds and the second emergency loans for small business owners in response to COVID-19 are executed without any setbacks.

On the same day, Vice Chairman Son made these remarks during a 'Financial Risk Response Team Meeting' held at the Korea Federation of Banks in Jung-gu, Seoul, attended by officials from the Ministry of Economy and Finance, Ministry of Land, Infrastructure and Transport, Ministry of SMEs and Startups, Financial Supervisory Service, and major commercial banks.

The second emergency loan for small business owners, which will begin accepting applications on the 18th, will be handled by six banks: KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, and IBK Industrial Bank of Korea. The Financial Services Commission plans to expand the program to all local banks wishing to participate so that small business owners can more easily receive funds through their existing banks.

The second emergency loan is expected to have few cases of rejection since 95% of the loan is guaranteed by the Korea Credit Guarantee Fund, a policy financial institution, and it targets all small business owners regardless of credit rating.

Applications for emergency disaster relief funds of up to 1 million KRW per household via credit and debit cards began at 7 a.m. on the 11th. Offline applications for credit and debit cards can be made at bank branches linked to card companies starting from the 18th, which coincides with the start date for the 10 trillion KRW scale second emergency loan applications for small business owners affected by COVID-19.

Vice Chairman Son requested, "Since the emergency disaster relief fund applications and the second phase small business owner program applications will be conducted simultaneously at banks on the 18th, please prepare to prevent any confusion among applicants." He especially urged, "At bank branches expected to be crowded with applicants, please strictly enforce quarantine measures and ensure that social distancing guidelines are well observed."

According to the Ministry of the Interior and Safety, on the 11th alone, applications for emergency disaster relief funds via credit and debit cards were received from 1,807,715 households nationwide, totaling 1,218.838 billion KRW. By major regions, 264.26 billion KRW was received in Seoul, 301.937 billion KRW in Gyeonggi, and 76.377 billion KRW in Busan.

Meanwhile, Vice Chairman Son evaluated that the tightening of the corporate bond and short-term funding markets has somewhat eased as a result of policy responses such as corporate paper (CP) purchases and policy collateralized bond obligations (P-CBO) issuance. According to the Financial Services Commission, the issuance volume of corporate bonds rated AA- or higher increased from 1.8 trillion KRW in March to 4.8 trillion KRW in April.

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