Savings Bank Industry Launches Guaranteed Loans for Small and Medium-Sized Businesses for the First Time

On the 2nd, at the first guarantee business agreement ceremony for mutual growth with small and medium-sized merchants in the secondary financial sector between three savings banks (SBI, OK, Welcome) located in Seoul and the Seoul Credit Guarantee Foundation, (from right) Jeong Gil-ho, CEO of OK Savings Bank; Kim Dae-woong, CEO of Welcome Savings Bank; Park Jae-sik, Chairman of the Korea Federation of Savings Banks; Han Jong-gwan, Chairman of the Seoul Credit Guarantee Foundation; Jeong Jin-moon, CEO of SBI Savings Bank; and Oh Hwa-kyung, CEO of Hana Savings Bank, are posing for a commemorative photo. Photo by Korea Federation of Savings Banks

[Asia Economy Reporter Kim Min-young] The savings bank industry’s first loan product with guarantees exclusively for small and medium-sized merchants will be launched.

The Korea Federation of Savings Banks announced on the 2nd that it signed a guarantee business agreement for the co-growth of small and medium-sized merchants with three savings banks located in Seoul and the Seoul Credit Guarantee Foundation to support funds for small and medium-sized merchants struggling due to COVID-19 and other difficulties.

At the signing ceremony, Jeong Jin-moon, CEO of SBI Savings Bank, Jeong Gil-ho, CEO of OK Savings Bank, Kim Dae-woong, CEO of Welcome Savings Bank, who participated in the special contribution, Han Jong-gwan, Chairman of the Seoul Credit Guarantee Foundation, and Park Jae-sik, Chairman of the Korea Federation of Savings Banks, attended.

This guarantee agreement is structured so that the Seoul Credit Guarantee Foundation supplies guarantees worth 40 billion KRW multiplied by 10, totaling 400 billion KRW, using 4 billion KRW funded by special contributions from the three companies as resources.

The support target is small and medium-sized merchants operating businesses in Seoul with more than one year of business experience, with credit ratings from 1 to 6. The guarantee limit is 30 million KRW for new applicants (up to 50 million KRW including outstanding guarantees for existing guarantee holders). The guarantee ratio is 95% of the loan amount, and the loan period is within 5 years (1 year grace period, 4 years installment repayment).

To enable quick financial support, applicants will be able to submit all necessary documents for loans and guarantees at the savings bank counter in a one-stop manner without visiting the Seoul Credit Guarantee Foundation.

The interest rate is relatively low, within 6.5% per annum, about 1.3 percentage points lower than the existing policy product, Savings Bank 햇살론 (Haetsalron).

Park Jae-sik, Chairman of the Korea Federation of Savings Banks, said, “As the first special contribution-type guarantee agreement conducted by the secondary financial sector, savings banks will play a pioneering role in supplying medium- and low-interest loan products for small and medium-sized merchants. We also expect the collaboration between regional financial institutions like savings banks and regional credit guarantee foundations to further strengthen the role of savings banks in regional finance.”

The Federation plans to pilot this special contribution guarantee agreement and then expand the participating savings banks through consultations with 16 regional credit guarantee foundations nationwide.

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