In response to the effects of the COVID-19 pandemic, the government’s labor bailout loan program on April 30 opened for applications. The bank I work for was among the first to accept applications, and as soon as we opened, we were flooded with applicants, and the telephones never stopped ringing.
The loans are available for Taiwanese workers aged 20 or older. The maximum loan amount is NT$100,000 per person and the current interest rate is 1.845 percent, which is based on Chunghwa Post’s fixed interest rate for two-year deposit accounts plus 1 percent.
The loan must be repaid within three years and there is an initial six-month grace period, during which only the interest must be paid. Between the seventh and the 12th month, the principal is amortized, and from the second year, the interest and principal should be paid.
It is estimated that 500,000 workers would benefit from the program, and therefore, the public should be aware of the credit evaluation summary sheet used by participating banks.
It contains active and passive information, with the active portion accounting for 65 percent of the sheet. It mainly measures the repayment ability of the loan applicant.
It is likely to collect work-related information, such as income and seniority, and proof of financial resources, such as assets and real estate, as reference for when the bank decides whether to approve the loan.
The passive information, which accounts for the rest, focuses on an applicant’s credit history, assessing their creditworthiness to see if they have a bad track record, such as late loan payments, rejected negotiable instruments, suspended credit cards or an excessive amount of debt.
To meet the needs of pandemic relief, more relaxed requirements were set for the credit evaluation, allowing even those without a previous credit score and who do not have labor insurance to apply, which gives most applicants an opportunity to receive a higher credit score that increases the chance that a bank would approve their application.
Applicants are usually informed of the outcome within three to five working days.
The system is designed to allow the government to help workers during this difficult time.
However, there are still a lot of people with bad credit ratings among those who apply for the loan. When they were told that they were not eligible for the loan, their disappointment and look of helplessness was heartbreaking.
The government could go a step further and focus more on economically disadvantaged people. For example, it could work through social welfare organizations that proactively provide care, ask about what difficulties and problems people experience, and provide subsidies in a timely manner.
The government could even consider the feasibility of providing transitional subsidies to reduce the impact of the pandemic on people’s livelihoods.
The most important thing is to make sure that people are well-informed through announcements and finding the right people to get the word out.
An excellent example of such proactive measures is provided by the Pingtung County Government, which offers a relief subsidy of NT$30,000 to workers who have no previous steady employment or are self-employed, and if a worker’s account is frozen due to debt or other issues, they can apply for payment through a check.
Now that the bailout loan program is up and running, the government should begin to plan ahead to subsidize other disadvantaged people who have not received help.
Jerry Chen is an assistant bank manager.
Translated by Lin Lee-kai
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