Borrowing money in Korea is difficult even under normal conditions, says Park Sang Kyu of the Federation of Small Business. The banks won't lend unless you are highly credit-worthy or have a substantial amount of collateral. In Japan, companies traditionally fell back on land for collateral. But real-estate prices have halved since the end of the bubble economy in 1990. Also after the bubble, cash flow has dried up in most companies.
Lending is extremely dangerous.
In their complacency, few firms prepared the sort of convincing business plans that the banks now demand before opening their loan books. Showing you have a bottom line good enough to service the debt is vital, agrees an executive at Bangkok Bank, Thailand's largest. If they have the cash flow, we are willing, more than willing, to lend to them. Such boldness is rare. We have to lend it in a very careful way.