S. Korea to expand emergency loans for virus-hit small biz

The South Korean government has rolled up its sleeves once again to help virus-battered small businesses. Next Wednesday it plans to expand its ongoing emergency loan program for merchants and entrepreneurs, and a Finance Ministry representative said it will also try to minimize the impact of the lockdown measures on the economy.

“The government has raised the credit limit on the second round of its emergency lending program, from the previous 10 million won ($8,620) to 20 million won. Those who have already received emergency relief loans in the first round, executed in March, are also eligible for the upcoming additional lending,” Kim Yong-beom, first vice minister of finance, said Friday in a meeting with related officials. 

“Preparations are underway to deploy computer systems at 12 local commercial banks for expanded relief loans.” 

In May the government launched the second round of the emergency loan program, worth 10 trillion won, as most of the previous loans were insufficient due to soaring demand. 

Regarding the New Hope Fund, part of the government’s second round of cash relief designed to support those citizens and businesses most affected by the resurgence of COVID-19, the government will ramp up efforts to provide the funds ahead of the Chuseok holiday, Kim said. Chuseok falls from Sept. 30 to Oct. 4 this year. 

The emergency fund beneficiaries will be selected by the financial authorities based on data on revenue losses, and the government will contact them via text message. Eligible beneficiaries can apply for the emergency funds online and need not submit documents. But small-business operators whose sales have fallen yet whose losses are not detected by the government system will need to provide related documents to the banks with their applications, Kim said.

The first vice minister’s remarks came in line with the policymaking Financial Services Commission’s comprehensive guidelines on the supplemental COVID-19 loan program, announced Tuesday. The guidelines focus on people and businesses most vulnerable as a result of the extended social distancing measures.

“Strong quarantine measures save lives, but threaten livelihoods. Instead of choosing between economic revitalization and tough virus curbs, the government will flexibly respond to economic uncertainties and virus spread, seeking a balance between quarantine and the economy,” Kim said. 

The government drafted a fourth supplementary budget, worth 7.8 trillion won, earlier this month to support small merchants and self-employed people. It is currently pending in the parliament for approval. The ruling Democratic Party and the main opposition People Power Party are slated to vote on it Tuesday. 

By Choi Jae-hee (cjh@heraldcorp.com)