Banks Emphasizing ESG, Unveiling Support Measures for Small Business Owners One After Another

Business Consulting and Various Training Provided
"More Proactive Actions Needed"

As social distancing measures for COVID-19 have been lifted, the streets near Gangnam Station in Seoul were bustling with citizens enjoying the evening on the afternoon of the 29th of last month. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Banks are rolling out support measures for small business owners one after another. As the issue of non-performing loans among small business owners comes to light, they are focusing on ESG (Environmental, Social, and Governance) management.

According to the financial industry on the 6th, Woori Bank will hold the ‘Small Business Startup Academy’ on the 12th and 13th at its headquarters in Jung-gu, Seoul, in collaboration with the Seoul Credit Guarantee Foundation. This is intended to support small business owners in preparing better startups amid the easing of COVID-19 social distancing measures. The program will include courses on ▲business plan writing ▲commercial area analysis ▲social network service (SNS) marketing ▲tax and labor law ▲startup support systems.

There is also financial support. Graduates will be eligible to apply for the Seoul Credit Guarantee Foundation’s ‘Small Business Startup Fund’ and can apply for a Seoul city startup loan of up to 50 million KRW. Additionally, customers using guaranteed loans will receive fee benefits such as exemption from Woori Bank’s internet and mobile banking fees and automated teller machine fees. Furthermore, 600 scholarship students will be selected among children of small business owners affected by COVID-19, with a total support amount of 830 million KRW.

Shinhan Bank is also providing education on digital competitiveness and tax knowledge for small business owners registered on the I’m Web platform. Hana Financial Group is offering various subsidies and one-on-one customized consulting.

These support measures are interpreted as part of ESG win-win management amid the rising issue of non-performing loans among small business owners. According to the financial sector, as of the end of the first quarter this year, the total amount of SME loans overdue by more than one month at four banks?KB Kookmin, Shinhan, Hana, and Woori?was 1.0297 trillion KRW, an increase of 9.9% (92.8 billion KRW) compared to the end of last year. The debt scale of self-employed people who endured COVID-19 is also ballooning. According to the Bank of Korea, as of the end of last year, the total loans to self-employed individuals in Korea amounted to 909.2 trillion KRW, nearly a 33% increase compared to the end of 2019, just before the COVID-19 outbreak. Concerns over loan defaults, which had been suppressed by COVID-19 financial support policies such as loan maturity extensions and interest payment deferrals, are growing again as economic recovery delays.

Since the Presidential Transition Committee recently announced support plans for small business owners, voices are emerging that more proactive industry-level actions are needed. A financial industry official said, "With rising prices causing consumption to shrink and the economy slowing down, the debt repayment ability of self-employed individuals may become more difficult," adding, "Not only the government but also the industry needs to devise more active and effective support measures together."