South Korea plans additional emergency loans to small businesses affected by virus
South Korea to grant additional emergency loans to small businesses affected by virus (Yonhap)
South Korea’s leading financial watchdog on Tuesday announced plans to launch the second round of a 10,000 billion won ($ 8.2 billion) emergency loan program from May 18 in an effort to financially support small business owners who have been affected by the novel coronavirus outbreak.
Affected business owners will be able to borrow loans from six commercial banks – Shinhan Bank, KB Kookmin Bank, Woori Bank, Hana Bank, Industrial Bank of Korea and NH Bank. Those who have already drawn on the emergency fund in the previous round in March are not qualified to apply. The loan approval process will take place on May 25, the Financial Services Commission said.
The next secondary loan program comes as most of the previous emergency loans have run out due to increased demand, and only commercial operators with high credit scores between 1 and 3 have benefited from the first program. . A lower number for the credit score indicates a better credit rating.
“As the first emergency fund is about to run out, bank branches are now advising business owners to apply for the second loan program,” an official from the Industrial Bank of Korea said.
Meanwhile, last-minute negotiations are underway between the financial regulator and local banks to set interest rates at 3-4%, double the rate for the first round of emergency lending, with the aim of avoid inappropriate loan applications.
“The low interest rate of the first loan program triggered excessive demand as some traders attempted to use the money for non-business purposes,” an official said. “A rise in interest rates this time is aimed at properly channeling funds to struggling small business owners.”
By Choi Jae-hee ([email protected])