3 out of 10 SMEs Say "Financial Conditions Worse Than Last Year" This Year

Korea Federation of SMEs Conducts Financial Usage and Difficulties Survey on 300 SMEs

Three out of ten small and medium-sized enterprises (SMEs) surveyed believe that their financial situation has worsened this year compared to last year. It was found that the smaller the company, the more difficult the financial situation.

The Korea Federation of SMEs (Chairman Kim Ki-moon) announced the results of the '2023 SME Financial Usage and Difficulties Survey' on the 21st. The survey was conducted from the 11th to the 15th of this month, targeting 300 SMEs.

Regarding this year's financial situation, 56.3% responded that it was 'similar' to last year, which was the most common answer. However, 31.7% said it had 'worsened,' significantly exceeding the 12.0% who said it had 'improved.'

Financial Conditions of Small and Medium Enterprises Compared to the Same Period Last Year

In particular, 43.7% of companies with sales under 3 billion KRW answered that their financial situation had 'worsened.' In the same question, only 19.3% of companies with sales over 10 billion KRW said it had 'worsened.' The most cited cause (multiple responses allowed) was 'poor sales performance (47.4%).' This was followed by rising labor costs (38.9%) and increased raw material prices (29.5%).

Regarding difficulties in raising funds through banks (multiple responses allowed), 'high loan interest rates (58.6%)' was the most frequently mentioned. The most requested measure related to bank loans (multiple responses allowed) was 'lowering loan interest rates (75.0%).' As the most urgent financial support task for SMEs, 'expansion of policies to ease interest burdens (50.7%)' was selected the most. This reflects the harsh reality SMEs face due to high interest rates.

In a survey on awareness and experience of win-win finance in the financial sector, responses were 'do not know well (83%),' 'know but cannot use (13%),' and 'know and use (3%)' in that order. This is interpreted as the field still feeling insufficient awareness of the financial sector's win-win finance measures.

Choo Moon-gap, head of the Economic Policy Division at the Korea Federation of SMEs, said, "Only 12% of SMEs reported that their financial situation has improved compared to last year," adding, "Various policies, including easing interest burdens, are required to improve the financial situation of SMEs."

He continued, "Many SMEs are either unaware of or unable to use the financial sector's win-win finance measures," adding, "Sufficient guidance on win-win finance, along with expanding unsecured loans and applying preferential interest rates for long-term transactions, is necessary to establish more effective and sustainable win-win finance measures."

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