AFTER THE RIOT: THE SEARCH FOR ANSWERS : Koreatown Takes Stock : For Many, Rebuilding Will Mean Turning to Outside for Help

The looted, burned-out face of Koreatown and of the Korean-owned businesses that dot southern Los Angeles won’t stay that way for long, merchants vow, but they say it will take more than their traditional savings clubs, family financial support networks and community banks to finance a comeback.

For the first time, many Korean business people are looking to the government for support in the form of low-interest loans and disaster relief. Some shop owners who suffered huge losses are asking major banks, such as Wells Fargo and Bank of America, for deferrals of home mortgage payments and commercial landlords for rent relief.

To be sure, families and friends in the tight-knit community, made up mostly of people who immigrated to the United States in the 1970s and ‘80s, are rallying in traditional fashion.

The Yoon family of six brothers and sisters, five of whom own liquor stores, lost one store to fire and three to looting. Last week, the 78-year-old family patriarch, Baek Young Yoon, phoned all of his children--those sweeping out their ransacked stores and those who were spared--and took stock of their financial assets, intending to reallocate resources among them.

But “there wasn’t enough money,” said his son, Joon Sup Yoon, a real estate broker, noting that some of the siblings are heavily in debt to banks and all have home mortgages to pay.

In normal times, many Koreans get seed money for businesses from kye --the savings clubs that serve as mutual aid and social organizations in Koreatown.

But in her looted store on Prairie Avenue in Inglewood, Jung Rha Yoon shook her head doubtfully when asked if her kye could help her now. With so many members’ businesses wiped out, some of these clubs may be in danger of folding--with major losses for members--instead of being able to come to their aid.

Jung Rha Yoon and her husband bought their first business with years of savings from her work in garment sweatshops and his in auto repair shops. Today, they owe nearly $750,000 on a second store and building on Century Boulevard that they bought last year. That building was burned out in the rioting, putting them back not to where they started, but way behind.

“Traditionally, the Korean business community here has not depended on the government,” said Annie Cho, executive director of the Korean American Grocers Assn., a 3,500-member trade group in Southern California. “Now, we really need the help of elected officials and the federal government. We’re not looking for a handout. We just want to get back on our feet.”

Cho said that more than 500 of the stores in the association were damaged or destroyed during the violence. About 95% of store owners have been unable to resume business because of the losses, she said.

Overall, about 2,000 Korean-owned businesses were damaged, with reported losses of about $360 million, according to Radio Korea, a local broadcaster that based its tally on calls from affected merchants. Ashes and empty shells are all that remain of some strip malls, appliance stores, auto parts operations, clothing outlets and other enterprises.

Korean Chamber Vice President Kee Whan Ha has been urging U.S. government agencies such as the Small Business Administration and the Federal Emergency Management Agency to set up a temporary office in the damaged area to more quickly process applications for business loans and other assistance. He said government officials have indicated that such an office may be established by next week.

But for many small-scale merchants, such as the people who sell clothes or toys at the indoor swap meets that are the department stores of poorer areas of the city, a lack of written business records may make it hard to get government help.

Ha is asking authorities to relax some regulations governing construction so that rebuilding can proceed speedily.

“If the city of Los Angeles cooperates with our builders and allows them to work without heavy red tape, most of the affected businesses can be rebuilt in six months,” he said. However, most store owners do not own the buildings in which they do business, and the possibility of reopening many burned-out shops depends on the intentions of landlords, who often come from outside the Korean community.

Shop owners are also unsure about the response of banks and insurers, which largely hold the fate of reconstruction in their hands.

Hanmi Bank, the largest Los Angeles-based Korean community bank, plans to announce a reconstruction initiative today, said its president, Benjamin Hong. While he would not reveal details, he said that deferral of interest and principal payments for six months or longer would be possible on a case-by-case basis.

Hanmi is exposed to $60 million in loans to Korean small businesses, about 20% of its total assets, Hong said. “We will have to provide help in order to recover our loans--not just for humanitarian, but for business reasons.”

Korean-owned shops tend to be heavily leveraged, with a typical store owing $200,000 to $500,000, Hong said.

John Britt, president of United Citizens National Bank, founded three years ago by local Korean-born businessmen, said he is not discouraged by the burned-out buildings he can see from his office window at the bank’s single location at Olympic Boulevard and New Hampshire.

He said his bank plans to be “as flexible as possible” and is optimistic that most of its existing $32 million in loans to Korean businesses eventually will be paid back.

Meanwhile, state banking regulators said they are closely monitoring any losses suffered by local Korean banks, which have a high concentration of loans in some of the hardest-hit areas of rioting.

Many Korean businesses are underinsured or uninsured, community leaders said. Edward Han, president of KorAm Insurance, one of the oldest brokers in the community, said some small shops, particularly in South-Central Los Angeles, have been unable to get coverage through major insurers because they are considered too risky. He said he is also worried about those who bought policies from out-of-state or foreign insurance companies that in the past have failed to pay claims.

Meanwhile, much of the dispossessed Korean and Korean-American community is relying on assistance from myriad relief groups organized by business associations, churches and ethnic media organizations--in addition to funds flowing in from friends and relatives.

Some business owners say they have not decided whether to rebuild. Sangjin Lee owns a 63,000-square-foot commercial building that had housed a swap meet mall on South Avalon Boulevard in Los Angeles. Vandals and looters trashed much of the building and stole or destroyed about $4 million worth of merchandise exhibited by about 70 vendors, Lee said.

“It took me 10 years to get in position to develop this business,” Lee said. “It took just 10 hours for it to be lost. I’m not sure I want to continue this business.”

However, others are already preparing to reopen their stores. Hyung Ki Jin, who owns a small shopping mall in Inglewood, is helping cover the cost of replacing broken glass for merchants at the center. Some of the mall’s merchants have already reopened, Jin said.

“Generally speaking, the likelihood of businesses coming back is very bright,” he said. “Korean entrepreneurs are very determined. I have never seen so much cooperation within our community to help our business people.”

Jin said many dispossessed merchants had learned lessons as a result of the rioting. Some will relocate, he said. Others will work at developing better relations with the people in the communities they serve. Others will become better business planners, he said.

“We’ll rebuild our businesses, and they’ll be stronger than before,” he said.

Times staff writer James Bates contributed to this report.