In the face of the spread of COVID-19 and the resultant economic impact, the government has proposed a number of relief and stimulus programs, however, some small business entities have encountered a bottleneck when attempting to apply for loans because they lack financial statements (or 401 statements). To address this problem, the FSC has invited banks, the Small and Medium Enterprise Administration of the Ministry of Economic Affairs, the Small and Medium Enterprise Credit Guarantee Fund of Taiwan (hereinafter referred to as the Credit Guarantee Fund), and the Bankers Association of The Republic of China (hereinafter referred to as the Bankers Association) to jointly develop a simplified loan approval score sheet to be used in place of financial statements and 401 statements. This simplified loan approval score sheet was discussed and approved by the Central Bank on April 16 and the Executive Yuan on April 18, with a view to meeting the needs of more small business entities who cannot submit financial statements.

 

The simplified loan application program is mainly applicable to small business entities with taxation registration and monthly sales below the threshold at which a business is required to issue uniform invoices. The maximum loan amount is NT$500,000, guaranteed by the Credit Guarantee Fund up to 100%, and the interest rate will not exceed 1%. Instead of submitting complicated application documents, a simplified scoring table is used in place of financial statements and 401 statements. Only loan applications that receive a score of 70 or more can be sent to the Credit Guarantee Fund for underwriting. It is estimated that 85% of Taiwan''s 500,000 small business entities (about 430,000) are eligible, and it is expected that application reviews can be completed within about 3 working days after the documents are submitted, thus ensuring that loans are quickly available. This program was launched on April 20, 2020. In addition, in order to encourage banks to the simplified loan application process, the FSC has developed incentive measures to reduce the ratio of allowance for bad debts from 1% to 0.5% for cases where banks muse the Central Bank''s reaccommodation funds.

 

In order to allow small business entities affected by the epidemic to obtain loans quickly after the launch of the program, the FSC on April 19 urged banks to deliver the simplified loan approval score sheet (as revised by the Central Bank and published on its website) along with the forms, work processes, and other required documents to their branches as soon as possible, so that the branches can immediately accept applications from the public on April 20. When customers intend to apply, branches may accept the applications before before applicants to submit the supplementary documentation, and are asked to approve in so far as they can within 3 days after acceptance of the application. In order to enable banks to fully understand how to use the simplified loan approval score sheet, the Central Bank held a briefing on April 20 to familiarize banks with the program. All banks sent staff to attend the briefing to understand the use of the score sheet and develop the ability to accept applications immediately and approve them within 3 days.