We Lend 'Export Receivables' with Just One Credit Guarantee Document

Mubo Partners with Shinhan and Hana Banks to Implement 'Export Credit Guarantee'
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Up to 10 Million KRW Export Receivables Guarantee Fee Support per Company

Lee In-ho, President of Korea Trade Insurance Corporation. (Photo by Korea Trade Insurance Corporation)

[Asia Economy Reporter Moon Chaeseok] From now on, domestic mid-sized and small export companies will be able to immediately convert their accounts receivable from overseas clients into cash at banks with just one export credit guarantee issued by the Korea Trade Insurance Corporation (K-sure).

K-sure announced that it will implement a new guarantee system called Export Credit Guarantee (Comprehensive Purchase) starting from the 7th. This is expected to help Korean companies struggling with financing due to the prolonged COVID-19 pandemic secure liquidity.

The Export Credit Guarantee allows small and mid-sized export companies to sell goods on credit to overseas buyers and immediately convert export receivables into cash at banks, with K-sure providing collateral to the banks.

Previously, a separate guarantee certificate had to be issued for each buyer, but now all export receivables with multiple buyers can be converted into cash with just one guarantee certificate.

This is because the Export Credit Guarantee issues one certificate per export company without specifying buyers, allowing the export company to freely use the total guarantee limit for transactions with multiple buyers.

Export receivables from new buyers can also be converted into cash using the existing guarantee certificate. The convenience for export companies is expected to improve dramatically. The review process and required documents have all been simplified.

The review has been reduced to a checklist format, and the required documents minimized. Simplified review criteria have been pre-established according to guarantee amounts, enabling prompt support for export companies that meet the criteria. Documents related to past transactions with specific buyers have been boldly omitted, reducing the number of required documents from 11 to 7 or fewer, within two-thirds of the previous amount.

K-sure announced that it signed a Memorandum of Understanding (MOU) with Shinhan Bank and Hana Bank to implement the system starting on the 7th. This is to ensure the new system settles early in the market and becomes active.

K-sure shares detailed information such as guarantee review criteria with banks to support smooth marketing. Each bank will support up to 10 million KRW in guarantee fees per company to reduce the cost burden on export companies.

Lee In-ho, President of K-sure, said, "After considering a simple and convenient usage method for export small and mid-sized companies under financial pressure due to the prolonged COVID-19 pandemic, we have introduced this new guarantee system." He emphasized, "We will closely cooperate with financial institutions and related organizations to provide policy support swiftly so that our companies can overcome difficulties caused by COVID-19."

Meanwhile, K-sure has continuously provided liquidity support to export companies to revive Korea’s export momentum. On June 24, it signed an MOU for joint financial support for liquidity crisis export SMEs with the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation, providing up to 300 million KRW in liquidity support per company. This supplied additional liquidity amid a shortage of financial institution credit limits for companies.

On June 10, the government held the '2020 2nd Expanded Trade Strategy Adjustment Meeting' chaired by Prime Minister Chung Sye-kyun, announcing that it will supply 134 trillion KRW in trade finance in the second half of the year (a record total of 316 trillion KRW+α for the whole year) to provide customized liquidity support for vulnerable industries and companies.

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