Eun Seong-su, Flood of 'SME and Small Business Support' in Response to Financial Sector Relay Meetings

KB Financial Expands Products to Reduce Financial Costs for SMEs
Shinhan Financial Group Chairman Cho Yong-byeong Orders "Prepare Various Support Measures"

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] Eun Sung-soo, Chairman of the Financial Services Commission, convened meetings with the heads of the five major financial holding companies (on the 16th), heads of policy financial institutions (on the 19th), and heads of financial associations (on the 22nd) over the past week to discuss smooth landing measures for COVID-19 financial support. Since then, gestures emphasizing support for small business owners and small and medium-sized enterprises (SMEs) have been spreading within the financial sector.

According to the financial sector on the 23rd, the loan maturity extension and interest repayment deferral measures for small business owners and SMEs affected by the spread of COVID-19 have been confirmed to be extended for another six months. The focus is now on what countermeasures will be created to prevent borrowers’ repayment burdens from increasing after the deferral period ends.

The Financial Services Commission plans to present measures to prevent borrowers’ repayment burdens from concentrating all at once after the deferral period ends in early March by preparing various long-term and installment repayment methods under the ‘Five Principles for Smooth Landing Support,’ which include allowing borrowers to choose the final repayment method and period.

Separately, it is also important how many diverse support programs and services for small business owners and SMEs the financial sector can prepare to provide tangible help to SME customers in managing their businesses. Chairman Eun’s request for the financial sector to continue playing an active role in responding to the COVID-19 crisis is based on this background.

Spread of Support Gestures for Small Business Owners and SMEs

In fact, various support gestures for small business owners and SMEs aligned with the financial authorities’ policy direction have been emerging in tandem with Chairman Eun’s relay meetings with the financial sector.

Shin Yong-byeong, Chairman of Shinhan Financial Group, held a ‘Group Management Meeting’ immediately after meeting with Chairman Eun and urged each group company to actively participate in extending the loan maturity extension and interest repayment deferral measures for SMEs and small business owners. He also requested, "Please prepare various support measures so that customers can wisely overcome the difficulties caused by the prolonged COVID-19 situation."

KB Financial Group expanded its existing four types (preferential loans, comprehensive insurance, credit cards, capital) of SME (including sole proprietors) exclusive ‘ONE KB Corporate Package’ by adding three more types (business account, check card, savings bank business loans), launching a total of seven types. The package strengthens preferential benefits such as exemption of various fees and loan interest discounts to provide practical help for SMEs to overcome management difficulties caused by the economic downturn.

Hana Bank is focusing on expanding support through collaboration with guarantee institutions. For SMEs facing difficulties such as COVID-19 export companies, the bank supports smooth access to guarantee institution loans by signing business agreements and providing contributions to guarantee institutions (Credit Guarantee Foundation, Korea Technology Finance Corporation, etc.), increasing guarantee issuance limits, and supporting guarantee fees.

Policy financial institutions are also moving quickly. Yoon Jong-won, President of Industrial Bank of Korea, announced plans to increase the proportion of SME loan supply in the first half of the year, stating, "We will continue customized financial support for companies affected by COVID-19 and strengthen financial structure stabilization and business restructuring support for a leap forward in the post-COVID era." Industrial Bank of Korea recently issued ESG (Environmental, Social, and Governance) certified bonds worth 1.05 trillion won to secure funds for supporting small business owners and SMEs facing financing difficulties.

A bank official said, "Banks have recognized that to maintain soundness during loan maturity extensions and interest repayment deferrals, small business owners and SMEs must be supported first, and have been preparing various SME support measures. Now that the Financial Services Commission Chairman has directly urged the financial sector to ‘actively support,’ various efforts responding to this will emerge throughout the industry."

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