Even 'Grade 8' Low Credit Borrowers Can Get Loans with Interest Rates in the 2% Range

Busan City Launches Nationwide First Inclusive Finance Policy for Low-Income Citizens... Busan 'Modulon' Commercial Bank Release
Starting Today, Busan Credit Guarantee Foundation, BNK Busan Bank, KB Kookmin Bank, NH Nonghyup, Hana Bank
Specialized F

Busan City Hall. The Busan Moduron, a financial inclusion initiative for low- and medium-credit citizens, will be launched first in Busan nationwide.

[Asia Economy Yeongnam Reporting Headquarters Reporter Kim Yong-woo] Financial policies embracing ordinary citizens who face setbacks at loan thresholds due to credit ratings have started for the first time nationwide in Busan.

This is the so-called inclusive finance product called ‘Modulon’. It is a specialized financial product exclusively for low-credit borrowers, including small business owners with credit ratings of 6 to 8 and credit evaluations of BB to CCC.

Busan City announced that it will launch Busan’s ‘Modulon’, an inclusive finance product for ordinary citizens, through commercial banks starting from the 30th, the first in the country.

In February, the city signed an agreement with BNK Busan Bank, KB Kookmin Bank, NH Nonghyup, and Hana Bank to contribute to Modulon in order to promote regional reinvestment by financial institutions and expand inclusive finance for low credit ratings.

However, the launch through commercial banks was temporarily postponed due to overlap with the government’s emergency funds for COVID-19 damage support (supporting grades 1 to 10). With the depletion of the government’s emergency funds, the launch has now been decided.

Busan’s ‘Modulon’ targets small business owners whose representative credit ratings are 6 to 8 and credit evaluation grades are BB to CCC. Those in the blind spots of financial policies had to either use the Sunshine Loan from secondary financial institutions with interest rates of 6% to 8% or borrow at high interest rates from illegal lenders, which imposed a heavy burden on fund utilization.

True to its name as inclusive finance, ‘Modulon’ has expanded the target credit rating range to include low to medium credit borrowers, lowering the threshold for fund loans. While the existing low to medium credit Sunshine Loan has an interest rate in the 7% range, it is expected to be offered at a mid-to-high 2% range interest rate through Busan City’s 0.8% interest rate differential subsidy.

The loan limit for Modulon is up to 50 million KRW per business through screening, the guarantee fee rate is lowered by 0.5 percentage points from the general 1.2% to 0.7%, and the participating banks are BNK Busan Bank, KB Kookmin Bank, NH Nonghyup Bank, and Hana Bank. It will be implemented from June 30 and is planned to operate for three years until June 2023. For more details, consultations are available at bank branches or Busan Credit Guarantee Foundation branches.

Byun Sung-wan, Acting Mayor of Busan, said, “With the launch of Busan’s inclusive finance product Modulon, the frustration that low to medium credit borrowers have experienced at the high thresholds of financial institutions is expected to be alleviated to some extent,” adding, “We will ensure that more financial institutions participate in regional reinvestment and inclusive finance going forward.”

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