Wed, Jan 22, 2003 - Page 11 News List

Micro-loan policy starts

INCENTIVE A total of NT$200 million has been set aside from the Small and Medium Business Credit Guarantee Fund to secure loans for middle-aged entrepreneurs

By Joyce Huang  /  STAFF REPORTER

The government has introduced a micro-loan program, offering preferential loans of up to NT$1 million -- at three percent interest -- to budding middle-aged entrepreneurs.

"The program will be a cure for the nation's hardest-hit unemployed group, aged between 45 to 65, who are usually the chief wage-earners in the family," Premier Yu Shyi-kun said at a press conference yesterday.

Micro-borrowers who meet the age requirements will also be required to propose business plans that include employing up to five staff members. The feasibility and profitability of the business plans will be carefully reviewed by banks before deciding whether loans will be granted.

According to Minister of Econ-omic Affairs Lin Yi-fu (林義夫), the loan's actual interest rate is 8 percent but the Cabinet-level Council of Labor Affairs (勞委會) will subsidize the loan to make the effective interest rate 3 percent. The maximum term of the loans will be six years.

The ministry expects that within one month there will be at least 100 applicants applying for loans under the program. The scheme will provide technical assistance and training to the new business owners until it wraps up on Jan. 21, 2005.

The government said it will budget a total of NT$200 million from the Small and Medium Business Credit Guarantee Fund (中小企業信保基金) to secure as much as 80 percent of the loans, the fund's president Lee Kuo-shyong (李國雄) said.

With the government acting as the guarantor, banks won't require collateral from borrowers, said Soo Jin-fong (蘇金豐), president of Taiwan Business Bank (中小企銀), although he also expressed concerns about the possibility that the program could result in more bad loans.

However, Rocky Yang (楊基寬), general manager of 104 Job Bank Corp (104人力銀行) said that few middle-aged workers may actually benefit from the program, no matter how well-intentioned it may be.

"Starting up a new business is more difficult for the middle-aged unemployed than landing a job," Yang said.

In a worst-case scenario, Yang said that the loans may later become a financial burden on the unemployed if their businesses fail to generate revenues to pay back debts.

Meanwhile at yesterday's press conference, the premier announced another plan -- to take effect soon after the Lunar New Year holiday -- allowing well performing small- and medium-sized enterprises to be listed on the TAIEX.

"To accelerate their growth, a stable channel will be established for small- and medium-sized enterprises to funnel capital," Yu said.

According to Minister of Finance Lin Chuan (林全), shares of small- and medium-sized enterprises -- which have NT$50 million in net assets and NT$4 million in profits for the previous year -- will be allowed to trade on the stock market.

To secure stock liquidity and prevent price manipulation, the government will require to-be-listed companies to circulate at least 10 percent of their stakes -- some 1 million to 1.5 million shares -- on the open market, Lin added.

According to Chien Hsin-nan (簡信男), President of Gre Tai Securities Market (櫃檯買賣中心), the nation' has a total of 1.07 million small- and medium-sized enterprises, of which about 1,200 are already listed companies. That's almost half of the some 2,500 companies that have gone public.

Chen expressed his hope that, following the relaxation of the regulations, at least 200 to 400 companies would soon apply to be listed on the TAIEX.

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