Bank of Korea expands support for small businesses

The central bank said Wednesday it will further expand financial support for smaller merchants and firms to help them ease a funding squeeze amid the new coronavirus outbreak.

The Bank of Korea (BOK) said it has decided to raise the cap on its low-rate loans to banks by 8 trillion won ($6.88 billion) to 43 trillion won. The decision will be approved by the monetary board Thursday.

Under the scheme, the bank provides funds to local banks at an interest rate of 0.25 percent to encourage them to extend lending to smaller merchants and companies.

Of the newly added funds, 3 trillion won each will be set aside for small merchants and companies that have suffered financial damage from the virus outbreak.

The remaining 2 trillion won will be reserved for lending to startups and parts and equipment producers to support their facility investment, the bank said.

Bank loans to smaller firms and self-employed people grew 6.1 trillion won in August, as they took out fresh loans to cushion the virus fallout, according to separate data from the central bank.

Yonhap