S. Korea plans extra emergency loans to virus-hit small businesses
S. Korea to deliver extra emergency loans to virus-hit small businesses (Yonhap)
South Korea’s top financial watchdog announced Tuesday it plans to launch the second round of an emergency loan program worth 10 trillion won ($8.2 billion) from May 18 in a bid to financially support small business owners who have been affected by the novel coronavirus outbreak.
The 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 from 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 upcoming secondary loan program comes as most of the previous emergency loans ran out due to soaring demand, and only business operators with high credit grades between 1 and 3 benefited from the first program. A lower number for the credit grade indicates a better credit score.
“As the first emergency fund is about to run out soon, bank branches are now advising business owners to apply for the second lending program,” said an official at the Industrial Bank of Korea.
Meanwhile, last-minute negotiations are underway between the financial regulator and local banks to set interest rates at 3-4 percent, double the rate for the first round of emergency loans, in a bid to prevent improper loan applications.
“The first loan program’s low interest rate triggered excessive demand as some business operators attempted to use the money for non-business purposes,” said an official. “A rise in interest rate this time is aimed at funneling funds properly into struggling small business owners.”
By Choi Jae-hee (firstname.lastname@example.org