Companies in all business sectors will be allowed to use their movable assets as collateral for loans from late August, an industry association of banks said Friday, in the latest effort to help smaller firms secure funds.
The Korea Federation of Banks said it revised its guidelines on movable assets, enabling firms in all business sectors to take out loans with movable assets starting Aug. 27.
The revision came after financial authorities unveiled a set of measures last month aimed at easing the rules on loans, allowing intellectual property and half-finished goods, for instance, to be used as collateral.
Currently, only companies in the manufacturing sector can use movable assets as collateral.
The revised guidelines will allow companies in retail, services and other sectors more leeway to acquire loans, the federation said.
A lack of collateral is one of the main reasons banks reject loan requests from small companies, officials said.
At the end of 2016, movable assets accounted for 38 percent of all assets owned by small and medium-sized firms. Property accounted for 25 percent.
However, only 0.05 percent of their movable assets were actually used to secure loans, financial authorities said. (Yonhap)