[2020 National Audit] COVID-19 Small Business Loan Support Execution Rate Only 13.6%

Assemblyman Yu Uidong "Prepared supplementary budget but hindered by bank guarantee screening"

[Asia Economy Reporter Jo Gang-wook] It has been revealed that the execution rate of the second round of small business loan support, which the government implemented by increasing the budget through supplementary budgets, is only 13.6%.

According to the 'Status of the Second Financial Support for Small Businesses' submitted by the Credit Guarantee Fund to Yoo Ui-dong, a member of the National Assembly's Political Affairs Committee from the People Power Party, the government's small business loan support amount was recorded at 1.3553 trillion won from May this year to the 8th of this month. This is far below the government's target amount of 10 trillion won.

On April 29, the government, in a joint announcement with related ministries, finalized the 'Detailed Implementation Plan for the Second Financial Support Program for Small Businesses' and announced that it would provide 10 trillion won in loan support to small businesses suffering from financial difficulties due to COVID-19. Accordingly, the Credit Guarantee Fund began small business loan guarantee operations on May 25.

During the first round of small business loan guarantee support, loan applications surged, paralyzing the Credit Guarantee Fund's guarantee operations. This caused delays in small business loan processing. To address this, the government entrusted banks with the second round of small business loan guarantees and urged prompt loan support.

However, since banks conducted the government's guarantee screening, they applied strict guarantee screening criteria to small businesses with low credit or existing card loans. As a result, many small businesses failed to pass the banks' guarantee and loan screening despite the loans being government-supported, thus not receiving actual support. Critics argue that the original purpose of small business loan support has been undermined.

Assemblyman Yoo said, "The government prepared a supplementary budget for small business loan support, but it has been hampered by the banks' guarantee screening," adding, "Financial authorities and banks must quickly identify and resolve the barriers preventing small business loan support from reaching the field."

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