Incheon City to Significantly Increase SME Development Funds This Year... 1.005 Trillion Won Support

New Support for Accounts Receivable Insurance and Agreement Guarantees... Applications Open from the 20th

Incheon City Hall

[Asia Economy Reporter Park Hyesook] Incheon City will increase the scale of support funds for small and medium-sized enterprises (SMEs) by 50 billion KRW from last year, raising it to 1.005 trillion KRW.

According to the city on the 14th, it will provide 950 billion KRW in management stabilization funds and 55 billion KRW in structural advancement funds to promote management stability and facility investment for SMEs. The target includes manufacturing and manufacturing-related service industries with business locations in Incheon as of the application date.

Last year, considering the domestic and international economic situation such as domestic demand recession and global economic slowdown due to the US-China trade dispute, 900 billion KRW was provided for 1,621 cases of management stabilization funds, and 55 billion KRW for 137 cases of structural advancement funds.

This year, the city will also expand SME support funds to provide customized support by growth stage from financially vulnerable groups to excellent companies and to offer multifaceted support.

Among the SME support funds, management stabilization funds compensate a certain portion of the interest incurred on bank loans, while structural advancement funds provide long-term low-interest loans for facility funds. Both greatly help reduce companies' financial costs and serve as a foundation driving corporate growth.

This year, to support the continuous and innovative growth of SMEs, the management stabilization funds will be significantly restructured to provide support not only for the existing interest differential compensation but also newly subdivided into accounts receivable insurance and agreement guarantees.

The accounts receivable insurance support project, in cooperation with the Korea Credit Guarantee Fund, supports part of the insurance premium (up to 5 million KRW per company, 80% of the premium) when subscribing to accounts receivable insurance. This is a public insurance operated by the Korea Credit Guarantee Fund that pays insurance money to prevent chain bankruptcies of companies in case of losses from credit transactions.

The agreement guarantee project supports debt guarantees up to 500 million KRW for technology innovation companies within seven years of establishment to strengthen SMEs' financing.

Amid expanding uncertainties across industries such as production and sales decline due to Japanese export regulations, this support measure was prepared to strengthen the competitiveness of new growth engine industries.

The city plans to cooperate with the Korea Technology Finance Corporation to support guarantees for technology companies through agreement guarantees, establish an innovation growth foundation for technology SMEs, and foster the materials, parts, and equipment industry.

Interest differential compensation is a project that compensates interest rates from 0.2% to 3.0% when companies take out working capital loans from banks, supporting from 500 million KRW to 5 billion KRW per company. The city has also newly established support funds for overseas return companies relocating to Incheon, offering up to 5 billion KRW per company with a preferential interest rate of 0.5 percentage points.

Additionally, structural advancement funds will significantly lower interest rates to continuously promote demand for facility investment and induce smart factory adoption.

As of the first quarter of this year, interest rates applied are 2.4% for machinery factory acquisition funds, 2.6% for knowledge industry center construction funds, 1.9% for venture startup funds, and 1.5% for special machinery purchase funds (smart factory introduction). The machinery factory acquisition fund rate was reduced from 2.8% last year to 2.4%.

Incheon's industrial structure is developed mainly around traditional manufacturing rather than advanced industries, making digital transformation essential to lead the Fourth Industrial Revolution in the future. The city expects that by providing facility funds necessary for SME structural advancement at interest rates significantly lower than commercial banks, it can act as a catalyst from securing smart factories to achieving advancement.

Applications for funds can be submitted from the 20th on the BizOK site, Incheon City's customized one-stop support system for SMEs.

An Incheon city official said, "This year, we focused on equipping SMEs with growth and technological innovation foundations," adding, "Due to increasing internal and external uncertainties, the management environment for SMEs is expected to become more difficult, so we are expanding support for SME development funds."

This content was produced with the assistance of AI translation services.