Financial Authorities Promote Raising Loan Limits for Small Business Owners' Second Loans

Financial Services Commission Financial Risk Response Team Meeting
"Thorough Assessment of Small Business Funding Needs"

Son Byung-du, Vice Chairman of the Financial Services Commission / Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Kim Hyo-jin] Financial authorities are pushing to raise the limit on the second round of small business loans in response to the novel coronavirus infection (COVID-19).

On the morning of the 8th, Son Byung-doo, Vice Chairman of the Financial Services Commission, stated in a video meeting of the Financial Risk Response Team, "We will supplement the program to ensure that financial support can be provided more effectively through limit adjustments of the second small business financial support program."

Vice Chairman Son said, "We will closely coordinate with related ministries to thoroughly understand the damages and funding needs of small business owners," and added, "Please ensure that the extension of loan maturities and interest repayment deferrals for small businesses and SMEs are implemented smoothly in the field," urging the financial sector.

The execution amount of the second emergency loans for small business owners by KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, and IBK Industrial Bank currently stands at about 590 billion KRW, which is low.

The second loan allows each small business owner to receive up to 10 million KRW (with a 5-year maturity). Recently, banks have been trying to activate usage by lowering interest rates.

Within the financial sector, there are calls to increase accessibility for small business owners by allowing overlapping applications for the first and second rounds and raising loan limits.

Proactive Management of Rapid Increase in Unsecured Loans
Plans to Check for Excessive Performance Competition

Vice Chairman Son also mentioned the recent surge in unsecured loans, saying, "We will continue proactive management efforts to ensure that excessive unsecured loans do not become a risk factor for our economy."

Accordingly, financial authorities are inspecting whether unsecured loans are properly reflected when calculating the Debt Service Ratio (DSR) for banks and savings banks.

Financial authorities will also investigate whether the recent increase in unsecured loans is due to performance competition among banks.

Meanwhile, the Financial Services Commission reported that from February to the 4th of this month, a total of 1,977,000 cases and 194.1 trillion KRW in financial support have been provided to small business owners affected by COVID-19.

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