Innovation SME Support Technology Finance Guidelines to Be Implemented Next Month

Technical Finance Handling Possible Based on Internal Bank Judgment

[Asia Economy Reporter Kim Hyo-jin] A focused support system for technology-innovative small and medium enterprises (SMEs) will be fully launched.

The Financial Services Commission announced on the 18th that it has prepared the "Technology Finance Guidelines," which will be implemented starting January next year.

Technology finance is a concept introduced in 2014 that allows SMEs with weak capital to grow by obtaining loans based on the innovativeness of their technology.

The outstanding balance of technology finance loans has increased by more than 40 trillion won annually, reaching 264.6 trillion won as of the end of October this year. This accounts for about 30% of all SME loans.

The financial authorities formed a task force (TF) consisting of the Credit Information Service, banks, and Technology Credit Rating (TCB) institutions to prepare guidelines containing detailed standards such as target industries and work procedures.

The financial authorities specified in the guidelines the requirements for dedicated technology evaluation organizations and evaluation experts to perform systematic and professional technology assessments.

Additionally, it was explained that the evaluation models developed and operated by each TCB institution will be standardized and coordinated to enhance the consistency and stability of the evaluation system.

Currently, under the leadership of the Credit Information Service, the "Standard TCB Evaluation Model" is being developed and is expected to be completed in the second half of next year.

The guidelines also include provisions for establishing an independent verification organization for the TCB evaluation model and mandating verification, as well as procedures related to model development and changes.

Based on this, the financial authorities decided to broadly support not only industries with high technological relevance such as manufacturing, knowledge service industries, and cultural content industries, but also companies in technology-based environmental and construction industries, renewable energy industry companies, new technology startup specialized companies, and companies objectively proven to have technological relevance or currently incurring research and development expenses.

The financial authorities also made it possible to handle technology finance for companies judged to possess technological capabilities through internal bank procedures.

Through the guidelines, the financial authorities prohibited inappropriate acts between banks and TCB institutions that undermine the independence of technology evaluations and presented fair business norms.

Inappropriate acts include banks demanding guaranteed specific evaluation results from TCB institutions, arbitrarily adjusting results, requesting evaluation results before completion, and TCB institutions responding by guaranteeing evaluation results or providing expected evaluation results in advance.

Technology evaluations for companies with conflicts of interest with TCB institutions are prohibited.

The guidelines also require periodic quality inspections of technology evaluations for banks capable of conducting their own TCB evaluations and TCB companies that have lacked external quality control systems, with incentives provided based on the results.

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