From April, Small Business Loans Available at Commercial Banks... Birth Year 'Odd-Even System' Implemented (Update)

Government Announces Rapid Execution Plan for Financial Support to Small Business Owners

Kim Yong-beom, the 1st Vice Minister of the Ministry of Economy and Finance, held a joint briefing with the Financial Services Commission and the Ministry of SMEs and Startups at the Government Complex Sejong on the 27th, announcing the "Rapid Execution Plan for Financial Support for Small Business Owners in Response to COVID-19."

[Sejong=Asia Economy Reporters Joo Sang-don and Jang Se-hee] The government has decided to expand loan channels and operate an odd-even system based on birth years to provide faster financial support to small business owners affected by the novel coronavirus infection (COVID-19).

On the 27th, at the Government Complex Sejong, the Ministry of Economy and Finance held a joint briefing with the Financial Services Commission and the Ministry of SMEs and Startups to announce the "Rapid Execution Plan for Financial Support for Small Business Owners in Response to COVID-19," which includes these measures.

First, starting from the 1st of next month, all commercial banks and the Industrial Bank of Korea will accept applications for emergency management fund loans at an annual interest rate of 1.5% for small-scale small business owners and self-employed individuals in retail, food service, lodging, and other sectors. Using this, loans can be received within 5 days after application, and loans are available without guarantee fees (around 0.5~0.8%).

Also, from April 1st, the "10 million won direct loan" program, which provides loans of 10 million won without guarantees to small business owners with credit ratings of grade 4 or lower at 62 Small Enterprise and Market Service (SEMAS) regional centers nationwide, will operate an odd-even system dividing application periods by birth year. On odd-numbered days, people born in odd years can apply for loans, and on even-numbered days, those born in even years can apply.

The government plans to entrust the screening of ultra-low interest small loans of up to 30 million won totaling 5.8 trillion won to regional credit guarantee foundations (Jishinbo) starting on the 6th of next month. This is to simultaneously conduct loans and guarantees to shorten the execution period to about 5 days. However, it is expected that during the first 2 to 3 weeks after implementation, accumulated volumes will need to be resolved, and the processing period will recover to about 5 days by late April.

Additionally, within this month, inter-agency agreements will be revised so that the Korea Credit Guarantee Fund (KODIT) and the Korea Technology Finance Corporation (KIBO) actively provide guarantees for ultra-low interest loans.

Since the 25th, the SEMAS fund's management stabilization fund, which only handles credit ratings of grade 4 or lower, will be unified into the "SEMAS 10 million won direct loan" instead of proxy loans through banks. At this time, high-credit borrowers (grades 1 to 3) will be actively guided to use other products through SEMAS.

Efforts will also be made to establish a demand-centered information provision and work system. This encourages small business owners to pre-check their credit ratings before applying for loans and visit the loan institution suitable for them. Online NICE evaluation information allows one free credit rating inquiry within 4 months, and the Small Business Support Center offers free pre-checks of credit ratings.

Monitoring of execution status will be conducted by the Financial Services Commission for secondary interest subsidy loans (commercial banks) and ultra-low interest loans (Industrial Bank of Korea), and by the Ministry of SMEs and Startups for management stabilization funds (SEMAS). A cooperation system will also be established to promptly resolve on-site difficulties centered on Jishinbo, where bottlenecks are concentrated. To expand guarantee supply by regional foundations, the central association's re-guarantee ratio will be raised (from 50% to 60%), and the guarantee supply scale will also be expanded (+2.3 trillion won).

Along with this, SEMAS, the Industrial Bank of Korea, and commercial banks will require documents such as a "confirmation form to prevent duplicate support" to prevent overlapping receipt of funds, and will provide prior notice that those who receive duplicate support through fraudulent means may face disadvantages.

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