S. Korea readies financial support for small businesses, builders

A shopkeeper naps as she waits for customers at a traditional market in Seoul, South Korea, April 7, 2022. REUTERS/Kim Hong-Ji/File photo

SEOUL —  South Korea has prepared financial support measures for small businesses and construction firms hurt by high interest rates, the government said on Wednesday, amid growing worries about domestic demand and the real estate sector.

The government, together with commercial banks, plans to provide 40.6 trillion won ($30.3 billion) of financial support for small and medium-sized companies through loan guarantees and lower interest rates from April, the Financial Services Commission (FSC) said in a statement.

The ministry in charge of financial policies also said it would continue to expand its joint scheme with commercial banks that returns interest income to small businesses and self-employed people who have taken out loans.

READ: South Korea credit market resilient to builder’s debt woes, so far

For builders struggling with high raw material costs and interest rates, the government will provide liquidity support through expanded guarantees and additional loans to help them finance real estate projects that are deemed profitable, while expediting support via its market stabilising fund, the FSC said.

Business sentiment in South Korea’s services sector for April turned the most pessimistic since November 2023, a central bank survey of companies showed on Wednesday.

READ: South Korea prepares $57-B corporate financial support program

In December, Taeyoung Engineering & Construction, a mid-sized South Korean builder, said it planned to reschedule its debt, raising concerns about liquidity troubles at other construction firms.

($1 = 1,339.3200 won)