Korea Enhances Emergency Loan Programme for Small Businesses

Banks are instructed to ensure their IT systems are ready for processing changes in the emergency loan programme, due to start on Wednesday.

South Korea’s government announced on Thursday (15 September) that it plans to make available a new round of emergency support for small merchants and SMEs, to help them with the impact of a resurgence of Covid-19.

The first round emergency loan programme for small merchants, announced in February, provided support to about 540,000 businesses.

For the second round, initially launched in May, the government will double the individual loan cap from KRW 10 million to KRW 20 million.

First round support recipients are also eligible to apply for second round emergency loans.

Local banks and the Korea Credit Guarantee Fund are instructed to ensure their IT systems are ready for processing changes in the second round emergency loan programme for small merchants, which will start from Wednesday (23 September).

Approximately 500,000 small merchants are expected to be eligible.

For SMEs, the government will make available KRW 2.5 trillion in additional lending support through preferential credit loans and expand P-CBO issuance available for each business entity and sector.

The government also said it will work on follow-up measures for the launch of the Korean New Deal fund, a KRW 20 trillion fund to be created over the next five years to finance economic initiatives that invest in technology sectors.

A working group led by the Korea Development Bank and Korea Growth Investment Corporation will work to come up with operational guidelines and specific plans.

Within this month, the government will establish investment guidelines, which will specifically designate investment targets and areas in Digital and Green New Deal initiatives.

The government also plans to hold investor relations events and strongly encourage participation in the Korean New Deal fund by financial institutions and retail investors.