Anxiety over credit problems in small- and medium-sized companies (SMEs) is increasing, as 67 per cent of loans to those companies expire this year.
SMEs’ total bank debt amounts to 263 trillion won (US$227 billion), of which 67 per cent is due this year. Banks are extending maturity dates or reducing interest rates but anxiety remains, since these benefits are extended only to companies showing signs of revival.
In a study of 1,500 manufacturing SMEs by the Korea Federation of Small- and Medium-sized Business, the average operating rate last month was 68 per cent, down 1 per cent from last year. Operating rates have remained in the vicinity of 60 per cent for more than a year due to the stagnant domestic economy and high raw material prices.
Source: Joong Ang Daily
