Government to Launch Financial Support Package
Worth over 50 Trillion won
The government announced an over 50 trillion won worth of financial support package on March 19 to help businesses and households affected by the COVID-19 outbreak. The package is composed of nine programs designed to help maintain business, ease the burden on borrowers and avoid credit crunch.
Nine programs
Help maintain business
- Provide small businesses with liquidity: A total of 12 trillion won to be spent on emergency funding for business operation and low interest rate loans (1.5%, lower than ordinary rates by an average of 2.3% points)
- Provide special guarantees on SME and small business loans: A total of 5.5 trillion won worth of guarantees to be provided through Korea Technology Finance Corporation, Korea Credit Guarantee Fund and local credit guarantee foundations
- Provide a 100 percent loan guarantee worth 3 trillion won for small merchants
Ease the burden on borrowers
- Defer loan repayment for SMEs and small businesses: At least six months of deferment to be offered by banks and nonbanking financial institutions
- Suspend loan interest payments for SMEs and small businesses: For six months starting on April 1
- Support debt workout programs: Debt relief programs at Credit Counseling and Recovery Service, and outstanding debt purchases by Korea Asset Management Corporation
Avoid credit crunch
- Use Bond Market Stabilization Funds to provide liquidity to corporations
- Issue a total of 6.7 trillion won worth of P-CBOs over the next three years
- Create an equity market stabilization fund: A temporary fund jointly invested by the financial sector, designed to be invested in equity index products
* Decisions yet to be made on the sizes of the Bond Market Stabilization Funds and the equity market stabilization funds
Please refer to the attached pdf
