This is a follow-up post, so if you would like to know the background to the meeting, please click this link to read the previous post. Here is the meeting result.
Financial difficulties are widely experienced by SMEs, as real economy is going through a tough period. Moreover, as economic condition does not seem to recover quickly, further financial challenges are expected. SMEs might have another difficulty.
The meeting checked up how financial support has been supplied so far. Aftermath the Global Financial Crisis, financial support was intentionally increased for the purpose of helping out SMEs. This trend still remains, showing relatively high level of financial support being provided to SMEs. However, the problem is that such support is not ‘evenly’ shared by all the sectors. Of course, each sector cannot receive exactly same amount of support. However, there is some notable differentiation, which widens a gap between the sectors.
Due to enhanced risk management, banks do not grant loans as much as before. This makes it harder for SMEs to find out sources of financing their businesses. Along with this trend, financial policy entities have been making efforts to provide policy loans. As a result, policy loans take a growing proportion out of overall loans available to SMEs.
Credit assessment procedure by banks was tightened as well. Accordingly, banks are over-preferring blue-chip companies to other small merchants and businesses with potential vulnerabilities. SMEs, with weak security capacity, are facing difficulties to apply for loans.
Overall, today’s meeting found out that SMEs will have been experiencing difficulties of financing their businesses due to economic downturns and vulnerabilities in the market. In this regards, FSC’s Vice Chairman asked some points to the representatives. Please move on to the next post to see what was requested by Mr. Choo!