SEOUL, Jan. 1 (Korea Bizwire) — Nine out of ten Korean SMEs are not planning to raise their capital requirements this year, according to a report by the Korea Federation of SMEs.
The report deals with 300 SMEs in Korea, and only 10 percent of those surveyed said that they are going to increase their capital requirements. This figure is half of that found in the 2013 report, where 24.4 percent of SMEs answered that they would raise their capital requirements for the following year. Among the surveyed companies, 78.3 percent said that they would maintain their capital requirements at 2014 levels.
Among the 10 percent of SMEs that are going to increase their capital requirements in 2015, 50 percent of them said that they would raise capital requirements to invest in facilities, 30 percent to purchase raw and subsidiary materials, and 10 percent to pay off debt. A total of 71.4 percent said they have secured more than 70 percent of their planned capital requirements for 2015, but 10.9 percent said that they have not secured more than half the amount planned for 2015.
Of the 300 surveyed SMEs, 11.7 percent said they would see a reduction in their capital requirements. The Korea Federation of SMEs said on December 29 that these figures are due to lack of confidence for entrepreneurs in this time of slower economic growth. In terms of difficulty in securing financing, 19.4 percent of the SMEs answered that the current high interest rates are hindering them from securing the needed amount of capital.
In terms of improving the current situation regarding financing from banks and thrift institutions, 33.6 percent of them said that a more streamlined loan qualification procedure is needed, while 28.1 percent said that secured charges should be lowered.
Among the respondents, 67.2 percent said they were paid primarily in cash last year compared to 49.5 percent in 2013. Although the rate of cash transactions increased in 2014 compared to 2013, respondents said there is still room for improvement regarding related systems. Issues regarding banks’ exerting their right of recourse were mentioned by 58.6 percent of the SMEs, and 24.1 percent said that delays in processing settlements are a problem.
By J. W. Choi (email@example.com)