Busan City Decides to Extend Loan Maturities for SMEs... Proactive Response to Interest Rate Hike Impact on Operating Funds

Busan City Hall.

[Asia Economy Yeongnam Reporting Headquarters Reporter Hwang Du-yeol] Busan City has made a sudden decision to extend the maturity of working capital loans for small and medium-sized enterprises (SMEs) scheduled to mature in the first half of this year. The policy will be implemented starting from the 24th.

To mitigate the impact of the Bank of Korea's base interest rate hike, the city decided to extend the loan maturity of working capital for SMEs scheduled to mature in the first half of this year by six months and partially subsidize the interest during that period.

The amount scheduled to mature in the first half of this year is 141.5 billion KRW for 633 SMEs, and during the six-month extension period, additional interest subsidies equivalent to 1.0% to 1.5% will be provided.

Considering the increased burden on SMEs due to social distancing measures amid the resurgence of COVID-19 and reflecting the opinions of local SME sectors, the city made the sudden decision to extend the maturity.

Busan City had previously implemented the first phase of loan maturity extension for working capital loans amounting to 58.4 billion KRW for 270 SMEs scheduled to mature from September to December last year.

A representative from Busan City stated, "With the Bank of Korea's additional base rate hike on the 14th and the government's loan maturity extension ending at the end of March, it is expected that financial costs for SMEs will increase and liquidity crises will worsen management conditions. Busan City's decision will provide practical help for stabilizing the management of local SMEs."

Mayor Park Hyung-jun of Busan said, "We have activated preemptive measures to reduce the adverse effects of the liquidity crisis caused by the base rate hike on the regional economy and to maintain a stable business environment. We will frequently communicate with local companies and discover support measures that companies truly need."