Entry no.2 20300156 Kim han-gil

Small-firm CEOs complain about loans
March 21, 2008
A meeting with Industrial Bank of Korea head Yun Yong-ro turned into chorus of complaints on Tuesday, as 80 chief executives of small- and medium-sized enterprises in the Gwangju area of Gyeonggi Province voiced their displeasure with difficulties in getting loans.Although Yoon promised to do his best to give more support to smaller firms, the CEOs were less than impressed. “Every time a new administration is launched, policies to give aid to small and midsized companies pour out and banks pledge to make it easier to borrow money, but the plans never materialize,” said the head of a construction materials company. “My hope has run out.”A CEO of a beverage bottle cap manufacturer complained that although metal prices have gone up 35 percent in the past two years, the cost of bottle caps has gone down. “Small companies are having a very difficult time nowadays,” he said. Financially stricken firms inevitably have to ask for bank loans, but banks apply excessively high regulations when giving out money, CEOs claim. A man called Kim, who runs a steel company, said, “After seeing a notice that banks provide special loans for buying raw materials, I went in to get some more information. But the procedure was too complicated and the loan extension period was too short.” Borrowing money with land or factories as collateral is not easy, some argued. Others expressed hopes that banks would not reshuffle their branch head positions, so contacts can be maintained.What are these plans the new administration has for smaller companies? First, the Ministry of Knowledge Economy, in cooperation with business lobby groups, has decided to form a group that will visit small- and medium-sized companies, listen to the challenges they face, and try to resolve problems.But the response was far from positive. A head of a cell phone parts-making firm said, “The business-friendly concept that every administration has emphasized does not apply to us. Showing off should make way for real change. For example, the entire industrial structure should be reformed to boost smaller companies’ competitiveness.” Making matters worse, loans to small firms are expected to be scaled down rather than increased. The Financial Supervisory Service warned against rampant lending, and many banks have decided to reduce their loan portfolios this year.By Kim Joon-hyun JoongAng Ilbo [spring@joongang.co.kr]