Lee Bok-hyun, Financial Supervisory Service Chief, Holds Meeting with Small Business Owners
"Expanding SME Financial Market Structure to Capital Market"
"Advancing Credit Screening System"
"Prompt Preparation of Debt Refinancing Support Products"
Lee Bok-hyun, Governor of the Financial Supervisory Service, expressed his determination to expand the paradigm of SME finance from loan-centered to utilizing the capital market. He also plans to create a loan environment that considers the growth potential of SMEs.
On the 7th, at an SME meeting held at the Korea Federation of SMEs in Yeongdeungpo-gu, Seoul, Governor Lee said, "We aim to create an opportunity to expand the financial market structure for SMEs, which currently rely on loans, to the capital market," encouraging SMEs to participate in the government's value-up program. At the event, Governor Lee discussed SME financial support measures with Kim Ki-moon, Chairman of the Korea Federation of SMEs, and other financial sector officials.
Governor Lee expressed concern, stating, "While household loans and real estate finance are increasing recently, productive finance for companies is shrinking." According to the Bank of Korea, the scale of real estate finance significantly increased from 1,443 trillion won at the end of 2015 to 2,882 trillion won at the end of last June.
He particularly pointed out that the dependence on collateral and guarantees in SME loans is increasing. The proportion of collateral and guarantees in banks' SME loans rose from 66.7% at the end of 2015 to 80.7% at the end of September this year. This means that SMEs with technological capabilities and growth potential may face difficulties in raising funds.
The Financial Supervisory Service plans to promote the advancement of the credit screening system to solve these problems. The system will be improved so that loans can be made focusing on the future growth potential of companies.
Additionally, support for banks' own debt restructuring for companies experiencing temporary liquidity crises will be strengthened. For closed self-employed individuals, refinancing loan products such as the 'Individual Business Restart Loan' will also be prepared. When closing a business, there is an obligation for immediate repayment of existing individual business loans, but this program converts them into long-term installment loans for households and offers benefits such as interest rate reductions if repayments are made faithfully.
Governor Lee said, "We will ensure that SMEs with potential can be properly evaluated for their growth potential," adding, "We also plan to faithfully promote support for SMEs struggling in the difficult economic situation."
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