Seoul City Provides Special Loans with Minimum 0.5% Interest to Social Economy Enterprises Affected by COVID-19

Long-term Low-interest Loans up to 300 Million KRW, Total Support of 15 Billion KRW
50% of This Year's Public Procurement Goods to be Purchased Early within This Month

In May 2018, the 'Deoksugung Fair Shop,' a social economy market organized by the Seoul Metropolitan Government, was held at Deoksugung Stone Wall Road in Jung-gu, Seoul. Photo by Mo Honam munonam@

[Asia Economy Reporter Jo In-kyung] The Seoul Metropolitan Government will provide a total of 15 billion KRW in 'COVID-19 Special Loans' to social economy enterprises whose sales have sharply declined due to the novel coronavirus (COVID-19) pandemic. The plan is to ease financial difficulties by offering ultra-low interest rates starting from 0.5%, with a maximum of 300 million KRW per company.

According to Seoul City on the 2nd, a survey of 179 social enterprises, cooperatives, and village enterprises located in Seoul revealed that over 98% of these companies experienced a decrease in sales after COVID-19, and 71% saw a decline of more than 50%.

These social economy enterprises often have weaker economic foundations such as collateral or credit compared to general companies and are frequently not classified as affected industries, resulting in blind spots in support.

Accordingly, the city decided to utilize the 'Seoul Social Investment Fund,' the largest of its kind nationwide, to provide COVID-19 special loans totaling 15 billion KRW. Depending on the extent of damage, companies can receive long-term low-interest loans at rates between 0.5% and 1.5%, up to 300 million KRW (including refinancing funds).

Compared to existing Social Investment Fund loans, the interest rate has been significantly reduced from 3% to as low as 0.5%, the loan limit increased from 200 million KRW to 300 million KRW, and the loan period extended from 5 years to 6 years. Companies that have previously received Social Investment Fund loans can also benefit from special maturity extensions of up to one year and refinancing options.

Additionally, when selecting social economy enterprises for the 'Financial Support Project' in May, the city will prioritize companies with confirmed damage, such as a decrease in sales, to facilitate rapid recovery.

Among these, the wage costs for newly hired employees will be supported with an additional one person per company within the budget if the company wishes, increasing from the original average of 2.4 persons per company. Furthermore, operational inspections for companies participating in the financial support project will be temporarily postponed or adjusted to a consolidated inspection in the second half of the year to reduce the burden on companies.

The city will also work to expand sales channels to establish a sustainable management and distribution environment for social economy enterprises. Half of the public procurement goods target amounting to 30 billion KRW will be purchased early this month, and a 'COVID-19 Affected Companies Special Sales Zone' will be set up and operated at the 'InSeoul Market' scheduled for September to October.

Seo Seong-man, Director of Labor and Livelihood Policy at Seoul City, said, "Social economy enterprises pursue both social value, such as creating jobs for vulnerable groups, and profit-making activities simultaneously, so it is difficult to reduce the number of employees even when sales sharply decline. Starting with this measure, we will expand effective support by accurately understanding the actual conditions and reflecting the voices from the field."

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