Small and Midsize Companies Find Financing Hard to Get from Banks

The nation's small and medium-sized firms are borrowing only 62.1 percent of their needed funds, on average, from banks, according to the Korea Federation of Small and Medium Business Sunday.

Its survey of 327 small and medium manufacturers showed that only 21.4 percent secure more than 90 percent of their needed funds from the banks. A greater number, 37.3 percent, receive less than 50 percent of their financing from these lenders.

Loans that are pledged with collateral accounted for 52.6 percent of the total. Unsecured loans or loans given on credit stood at just 6.9 percent.

The annual rate of secured loans stood at 8.8 percent, while loans on credit amounted to 9.4 percent. These figures are sharply higher than the rates of 6.7 percent for secured and 7 percent for unsecured loans that had been hoped for by survey participants.

With regard to any changes discerned on banks' lending services since the financial reform, only 23.2 percent of respondents replied that borrowing had become easier, while most of them replied that taking out loans from banks was still difficult and that no changes had been noticed.

by Lee Hyun-sang