[Small Business 2nd Loan Q&A] "Support Excluded if Tax Arrears or Existing Debt Delinquency"

[Asia Economy Reporter Kim Hyo-jin] Small business owners who have overdue national or local taxes or are delinquent on existing debts cannot receive the second emergency loan for COVID-19 relief support.

According to financial authorities and banks on the 16th, from the 18th, seven banks including Shinhan, Kookmin, Woori, Hana, Industrial Bank of Korea, NongHyup, and Daegu Bank will simultaneously begin pre-applications for the second financial support loan worth 10 trillion KRW for small business owners struggling due to COVID-19.

In addition to tax arrears and existing debt delinquencies, those who have already used one of the interest subsidy loans currently offered by commercial banks, the ultra-low interest loan from Industrial Bank of Korea, or the management stabilization funds from the Small Enterprise and Market Service are also excluded from this second loan.

The second loan is structured so that the Korea Credit Guarantee Fund guarantees 95% of the total loan amount. The handling banks conduct both loan screening and guarantee screening simultaneously.

Below are the main points regarding the second loan summarized in a Q&A format by the Financial Services Commission.

▲Who is eligible for the second loan?

=All small business owners (individual business operators). However, actual loan approval depends on the bank’s loan screening results, and those with current national or local tax arrears or existing debt delinquencies are excluded. Those who have received interest subsidy loans from commercial banks, ultra-low interest loans from Industrial Bank of Korea, or management stabilization funds from the Small Enterprise and Market Service are also excluded.

▲Do I need to obtain a guarantee certificate from the Korea Credit Guarantee Fund first to use the loan?

=For this loan, the handling bank performs both loan screening and guarantee screening. Therefore, you can apply for the loan and guarantee simultaneously at the bank without visiting the Korea Credit Guarantee Fund.

▲What are the interest rate, limit, and term?

=The loan interest rate is around 3-4%, which may vary depending on credit rating. The limit is 10 million KRW per business, and the term is 5 years (2 years grace period, 3 years installment repayment).

▲Where can I apply?

=From the 18th, applications can be made at all branches of Shinhan, Kookmin, Woori, Hana, Industrial Bank of Korea, NongHyup, and Daegu Bank. Shinhan, Kookmin, Woori, Hana, and NongHyup Banks also accept applications online. Industrial Bank of Korea and Daegu Bank will enable online applications after mid-June. It is recommended to apply through your existing bank as it may be advantageous in terms of credit evaluation and interest rates.

▲When can funds be received?

=Applications start on the 18th, but since loan and guarantee screenings will begin in earnest from the 25th, funds are expected to be received sequentially from the end of this month at the earliest.

▲Is it not possible to use the loan at regional banks other than Daegu Bank?

=Busan, Gyeongnam, Gwangju, Jeonbuk, and Jeju Banks will be available after mid-June once their IT systems are completed.

▲What documents are required for the loan application?

=You must prepare six documents including business registration certificate, VAT standard tax base certificate, national and local tax payment certificates, real estate registry copy (or lease contract), and income amount certificate. However, additional documents may be required depending on each bank’s loan screening criteria.

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