Gwangju City, Mutual Guarantee Agreement to Support the Auto Parts Industry

Join-cheol Jo, Vice Mayor of Culture and Economy of Gwangju Metropolitan City (second from the left), attended the "Special Mutual Growth Guarantee Agreement Ceremony to Support the Automotive Parts Industry" held at the Korea Automobile Manufacturers Association in Seoul, hosted by the Ministry of Trade, Industry and Energy and the Ministry of SMEs and Startups. After the agreement, he took a commemorative photo with attendees including Seong Yun-mo, Minister of Trade, Industry and Energy (seventh from the left), and Park Young-sun, Minister of SMEs and Startups (eighth from the left). Photo by Gwangju Metropolitan City.

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] Gwangju Metropolitan City announced on the 11th that it signed a ‘Special Win-Win Guarantee Agreement to Support the Automotive Parts Industry’ at the Korea Automobile Industry Association in Seoul, hosted by the Ministry of Trade, Industry and Energy and the Ministry of SMEs and Startups, with participation from finished car companies, the Korea Technology Finance Corporation, and local governments.

This agreement was made based on the judgment that although various programs have been provided to support liquidity since the outbreak of COVID-19, there are still parts companies with low credit ratings or those experiencing liquidity shortages due to production disruptions at overseas factories.

Accordingly, the government, local governments including Gwangju City, and the finished car industry plan to establish a win-win financial support program for automotive parts companies worth more than 500 billion KRW, focusing on companies that have secured technology and stable suppliers but are facing difficulties in securing liquidity due to credit rating downgrades caused by COVID-19 damages.

Finished car companies will contribute 24 billion KRW, the government 20 billion KRW, and local governments 9.5 billion KRW.

The support targets are parts companies with assets under 100 billion KRW and fewer than 1,000 regular employees among 1st to 3rd tier suppliers recommended by finished car companies and regional Korea Technology Finance Corporation branches. The selection of supported companies will focus more on the company’s business history, technological capabilities, and whether they have secured supplier companies rather than credit ratings.

The support scale per company will be about one-quarter to one-third of annual sales, with a maximum support limit of up to 3 billion KRW for working capital and up to 10 billion KRW for facility funds.

Applications and consultations can be made at Korea Technology Finance Corporation branches nationwide starting from the 18th. After submitting documents, a review will take about a week, after which a guarantee certificate will be issued, enabling loan applications at financial institutions such as banks and NongHyup.

Additional support includes a 0.3%p reduction in guarantee fees by the Korea Technology Finance Corporation itself, and Shinhan Bank and Hana Bank branches will further reduce guarantee fees by 0.2%p.

Jo In-cheol, Deputy Mayor for Culture and Economy of Gwangju City, said, “The liquidity support program is expected to provide great help to parts companies struggling due to COVID-19,” and added, “We will actively support local companies to endure the crisis well and regain vitality.”

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