Political lenders to expand small business loans with low, fixed rates: FSC
Korea’s financial regulator said Monday that state-run political lenders plan to increase low, fixed-interest loans to small businesses to help ease their financial burdens caused by high inflation and rising costs. of borrowing.
The Financial Services Commission (FSC) said in a policy briefing to Chairman Yoon Suk-yeol that it will also quickly implement a package of measures worth more than 125 trillion won ($95 billion). to provide financial support to vulnerable people.
Under the policy plan, the government plans to offer 6 trillion won of funds to small businesses through fixed-rate loan programs through the Korea Development Bank and the Industrial Bank of Korea, the FSC said. .
Borrowing costs rose as the central bank continued to tighten monetary policy to curb high inflation.
Bank interest rates on new business loans rose 0.24 percentage point to 3.84% in June from the previous month, central bank data showed. Lending rates for small and medium-sized businesses rose 0.27 percentage points month-on-month in June.
In July, the Bank of Korea (BOK) carried out an unprecedented rate hike of 0.5 percentage points, marking the sixth rate increase since August last year. The BOK is widely expected to raise its key rate further in the coming months.
Last month, the FSC rolled out a package of measures to ease the debt service burden of small traders and other vulnerable people hit hard by the Covid-19 pandemic.
The measures include establishing a 30 trillion won fund to restructure the debt of small traders and providing low-interest loans worth 41.2 trillion won to the self-employed.