Posted November. 11, 2008 09:21,
President Lee Myung-bak yesterday urged banks to expand liquidity to small and medium-size companies hit hard by the global financial crisis.
The government will also raise the guarantee limit of Korea Credit Guarantee Fund on loans to small firms. In addition, new measures will promote the use of products from smaller companies by public agencies and state-owned enterprises.
The Financial Services Commission, the Public Procurement Service and the Small and Medium Business Administration briefed these measures to the president at a meeting at Banwol Industrial Complex in Ansan, Gyeonggi Province, to further expand financial assistance for small and medium-size companies.
No matter how good policies are, they are of no use if corporations become too strained. We have to bring them back to life even with temporary capital assistance. The government is determined not to let financially viable companies fall victim to financial shortages, President Lee said.
The Financial Services Commission said the nation`s two credit guarantee agencies -- Korea Credit Guarantee Fund and Kibo Technology Fund -- will raise their guarantee limit on loans to small companies from 83-85 percent to 95 percent.
The guarantee limit will be raised for smaller companies under the Fast Track Program to 65 to 75 percent from 60 to 70 percent.
The increased loan guarantee is expected to allow banks to extend new loans or roll over existing ones to small companies without worsening their financial soundness.
The Public Procurement Service reported measures to promote government purchases of products manufactured by small companies. The prepaid amount will rise from 20 to 50 percent to 70 percent when purchasing goods from small companies and suppliers will get direct payments.
Through such methods, the agency is expected to provide a combined 8.1 trillion won (6.1 billion U.S. dollars) to small and medium-size companies.
Moreover, the Small and Medium Business Administration will increase the funding pool for start-ups from 800 billion won (610 million dollars) to 1.6 trillion won (1.2 billion dollars) by 2021.