The South Korean government will increase direct loans to small- and medium-sized enterprises (SMEs) in 2005, as private lenders have been tending to avoid extending credit to those companies because of the sagging economy, officials said Sunday.
High profile government economic officials have been urging private banks to increase lending to SMEs to little effect, as lenders see a greater risk in non-performing loans from smaller clients in times of economic downturn.
"The proposed amount of policy money, which SMEs may receive directly from the government without having to go to private lenders, has been lifted from 480bn won (US$456.48m) last year to 1.25 trillion won this year," said an official from the Small and Medium Business Administration on condition of anonymity.