The Ministry of Culture, Sports and Tourism on Monday announced that it will inject 50 billion won ($42.3 million) to provide loans without collateral to small and medium-sized companies involved in tourism, following the outbreak of the COVID-19 virus.

“We hope that providing prompt and practical emergency financial assistance will help those suffering in the tourism industry due to the spread of COVID-19 recover and revitalize management fast,” ministry official Choi Jae-won said.

The ministry will provide credit guarantees to small and medium-sized enterprises so that they can take out loans without collateral.

A 1 percent interest rate will apply to this special loan, a rate that is lower than the usual interest rate of 1.5 percent. The ministry will allow them to borrow up to 200 million won, lifting the limit of 100 million won that had applied to SMEs. The repayment period will also be extended by one year, from five years to six.

Companies applying for the loan should apply for a credit guarantee first at the local credit guarantee foundation branches starting Wednesday. Once a company obtains a credit guarantee certificate, it can receive loans from the 1,138 NongHyup Bank branches.

For tourism companies that have already received loans and have to repay within one year of the date of this announcement, which was Feb. 17, the government will allow them to apply for an extension of the maturity date.

Concerning loans for facilities improvement taken out by hotel business operators in Seoul, Gyeonggi Province and Incheon, which had to pay raised interest rates starting at the beginning of the year, the government said it will maintain the former rate.

More information on the special loan and changes to the interest rate for hotel operators can be found at the ministry’s website, www.mcst.go.kr.

The government will also start providing loans that are set for the second quarter a bit earlier, in March. Since the first quarter this year, organizers of international conferences and medical institutions that attract foreign patients and tourists are also allowed to take out the loan, which gives up to 3 billion won per company. Low-cost airlines designated as tourist service providers by the government can also make use of this loan.

By Song Seung-hyun (ssh@heraldcorp.com)