SMEs "Loan Maturity Extension and Interest Repayment Deferral Should Be Further Extended"

[Asia Economy Reporter Lee Junhyung] Due to the impact of the novel coronavirus infection (COVID-19), 8 out of 10 small and medium-sized enterprises (SMEs) hope for an additional extension of loan maturity extensions and interest repayment deferral measures.

The Korea Federation of SMEs announced the results of the 'Survey on SMEs' Opinions Regarding Loan Maturity Extension and Interest Repayment Deferral' on the 25th. The survey was conducted from the 15th to the 20th, targeting 330 SMEs utilizing financial sector loans.

In the survey, 77.9% of SMEs responded that loan maturity extension or interest repayment deferral measures should be extended further. The response that 'loan maturity and interest repayment should be deferred simultaneously' reached 68.9%. Regarding the period for which additional extension is needed, 38.9% answered that it should be extended until the end of this year. Following that, 28% said 'until the first half of next year,' and another 28% responded 'until the end of next year.'

The reasons for needing additional extension included 37.1% citing 'sales decline due to the prolonged COVID-19 pandemic.' This was followed by 'lack of financial capacity to repay loans and interest payments (35.1%)' and 'need to pay labor costs, rent, etc. (22%).'

Additionally, it was revealed that nearly half of SMEs were either unaware of or did not receive benefits from the loan principal repayment maturity extension and interest repayment deferral measures. Among all companies, 45.8% answered that they 'were unaware' of these measures, and 54.2% responded that they 'did not receive support.' Only 19.6% of companies received support for both loan maturity extension and interest repayment deferral.

Meanwhile, 53.9% of SMEs expected their sales last year to decrease compared to the previous year.

Choo Moon-gap, head of the Economic Policy Division at the Korea Federation of SMEs, stated, "The loan maturity extension and related measures were implemented twice last year," adding, "These played a significant role in helping SMEs and small business owners overcome liquidity crises caused by the prolonged COVID-19 pandemic." He further said, "As economic uncertainty is intensifying this year as well, financial authorities should implement additional extensions for loan maturity extensions and interest repayment deferrals."