Incheon Small Business Development Fund 1.05 Trillion Won... New Support for Accounts Receivable Insurance Premiums

Business Stability 950 Billion KRW, Structural Advancement 55 Billion KRW
Accounts Receivable Insurance Premium Support of 5 Million KRW per Company... Agreement Guarantee Also Implemented

Incheon City Hall

[Asia Economy Reporter Park Hyesook] This year, funding for fostering small and medium-sized enterprises (SMEs) in the Incheon area will increase by 50 billion KRW from last year, reaching a total of 1.005 trillion KRW. In particular, Incheon City is drawing attention by launching a new project to support accounts receivable insurance premiums aimed at preventing a chain of corporate bankruptcies.

According to Incheon City on the 17th, 950 billion KRW will be allocated for business stabilization funds and 55 billion KRW for structural advancement funds to promote SME management stability and facility investment this year. This amount is 50 billion KRW higher than last year, as the city has significantly increased SME fostering funds to provide tailored support at each growth stage, from financially vulnerable groups to excellent companies.

Among the SME fostering funds, the business stabilization fund compensates a certain portion of interest incurred on bank loans, while the structural advancement fund provides long-term low-interest loans for facility investments. Both greatly help reduce corporate financial costs and serve as a foundation driving business growth.

This year, to support continuous and innovative growth of SMEs, the business stabilization fund will be extensively restructured to include not only the existing interest differential compensation support but also newly segmented support for accounts receivable insurance and agreement guarantees.

Accounts receivable insurance is a public insurance system that compensates for losses incurred when SMEs that have subscribed to the insurance fail to collect payments after credit transactions.

Incheon City, the Korea Credit Guarantee Fund, and Incheon Technopark recently signed a "Business Agreement for Promoting Accounts Receivable Insurance Support Projects." Accordingly, the city will support insurance premiums up to 5 million KRW for companies, and the Korea Credit Guarantee Fund will offer a 10% discount on insurance premiums for companies subscribing to accounts receivable insurance.

Insurance payments are made when the client company applies for legal procedures such as bounced checks, closure, corporate rehabilitation, or bankruptcy, or when two months have passed beyond the pre-agreed payment period with the client. Insurance subscription is available to SMEs except for certain industries such as lodging, food service, and real estate.

The city expects that through this agreement, SMEs will not only escape from profitable bankruptcies and chain defaults but also significantly improve their risk management capabilities, as the Korea Credit Guarantee Fund will conduct credit evaluations and monitoring of client companies.

Agreement guarantees are a project that supports debt guarantees up to 500 million KRW for technology innovation companies within seven years of establishment to strengthen SME financing.

Amid growing uncertainties across industries due to production and sales declines caused by 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, build a foundation for innovative growth of technology SMEs, and foster the materials, parts, and equipment industry.

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