CO-Tech, a small manufacturer specializing in coating equipment, faced a severe cash shortage in 2012.

The company’s CEO said he visited several commercial banks to seek loans, only to be turned down again and again.

“No one would lend money because of our rather unfavorable balance sheet and low credit rating,” Kim Young-bae, the CEO of CO-Tech recalled.

That was when he discovered Shinhan Bank’s loan service aimed at small and medium-sized businesses.

The country’s second-largest lender has less restrictive terms and conditions for small businesses hoping to raise capital, as long as they are able to prove their growth potential or technological prowess, he noted.

Thanks to the loan from Shinhan, the company was able to sign a contract worth about $10 million that year, according to the CEO.

Many small enterprises without collateral or low credit ratings are often forced to turn to non-banking financial institutions to raise capital at the risk of higher borrowing costs.

To provide more flexibility and make it easier for small businesses to raise funds, Shinhan has been focusing on financing small but sound companies over the past years.

Shinhan has issued some 1.9 trillion won ($1.77 billion) in new loans to small and medium-sized business in the past year ― that does not include the 207.7 billion won it provided to high-tech companies to assist in facility establishment.

Shinhan also donated 2 billion won to cover fees that firms have to pay the state-run Korea Technology Finance when having technology assessed.

Beside financial resources, Shinhan’s corporate finance department also offers consulting services tailored to small enterprises on the feasibility of new ventures, M&A strategies, financial management and personnel, according to the bank.

The move to increase SME lending in Korea is part of a broader push by Shinhan to boost the bank’s exposure to the sector, the bank said.

“We are planning to strengthen the support for SMEs by developing various financial products and establishing a team exclusively for analyzing their potential and technological prowess,” Seo Jin-won Shinhan Bank president said in a statement.

By Oh Kyu-wook (596story@heraldcorp.com)