By Kim Jae-kyoung
Staff Reporter
In the midst of the global economic recession, many local small- and medium-sized enterprises (SMEs) are on the verge of going under as they struggle for cash and access to capital.
Since late last year, when the global credit crisis hit the country, more SMEs have become unable to service debt payments due to snowballing interest caused by the sharp depreciation of the local currency and rising certificate of deposit (CD) rates.
Against this backdrop, Kookmin Bank, the nation’s largest lender, has stepped up efforts to help struggling firms. Since early this year, CEO Kang Chung-won and other executives have visited SMEs on a regular basis to hear about their difficulties.
The move was designed to better understand the situations they find themselves in by opening a communication channel and providing financial assistance in a timely manner.
In addition, in a bid to provide more liquidity, the lender is rolling over maturing loans for SMEs and has quickened its lending procedure by allowing branch managers to make arbitrary decisions over the extension of secured loans.
Kookmin has come up with various financial aid programs for SMEs in order to save viable but temporarily cash-strapped companies.
In January, in cooperation with the Korean Federation of Credit Guarantee Foundations, the lender introduced a special loan program for small business owners to help them tide over the economic turmoil. Under the program, they were able to borrow up to 50 million won.
``Small self-employed businesses are very important for the economy. They are key barometers of the economic health,’’ said a Kookmin official. ``We introduced this program because we believe that revitalizing small businesses is a key to bolstering the economy.’’
In February, the bank unveiled a ``real estate security guarantee’’ program for SMEs in agreement with the Korea Credit Guarantee Fund (KCGF) and the Kibo Technology Fund. Under the agreement, even if the prices of real estate, provided as security, fall, SMEs won’t have to shoulder an additional repayment burden because the lender offers a guarantee.
Kookmin signed a contract with the KCGF and Kibo to provide liquidity for cash-hungry SMEs. To this end, it contributed 50 billion won each to the two funds, which made 1.35 trillion won in new loans available.
On April 3, it also signed a contract with the federation of credit guarantee foundations and Seoul City Credit to establish the electric guarantee system in cooperation with 14 regional foundations.
Finally, on March 24, the lender signed a contract with the Export-Import Bank of Korea, Korea Export Insurance Corp. and Small & Medium Business Administration to foster 500 SMEs exporting $5 million or more, known as ``SME 500-500 Project.’’ For SME financing, the lender secured a credit line of $250 million from the United States and European banks.
``We have made the utmost efforts to help local SMEs overcome the economic crisis over the past year. We will continue our efforts to develop various products and programs for SMEs to enable them to play a role in reviving the economy,’’ a Kookmin executive said.