Shinbo to Support 20 Trillion Won in Trade Credit Insurance for SME Bankruptcy and Business Stability

[Asia Economy Reporter Song Seung-seop] On the 18th, the Korea Credit Guarantee Fund announced that it will support trade credit insurance worth 20 trillion won this year.

This trade credit insurance is used to prevent chain bankruptcies and support management stability for small and medium-sized enterprises (SMEs) struggling due to COVID-19.

Trade credit insurance is a public insurance system operated by the Korea Credit Guarantee Fund under the commission of the Ministry of SMEs and Startups. It compensates up to 80% of losses incurred when a company that has subscribed to the insurance sells goods or services on credit but fails to collect payment from the customer.

To enhance accessibility and convenience of trade credit insurance, sales channels will be diversified. A non-face-to-face integrated service application (app) enabling everything from mobile subscription to insurance claim will be developed, and insurance guidance and recommendations through banks will also be made possible.

In addition, agreements with local governments to reduce insurance premium burdens for SMEs located in the regions will be continuously promoted. Currently, the Korea Credit Guarantee Fund has signed 'insurance premium support agreements' with 14 local governments including Chungnam and Jeonbuk to support insurance premiums for regional SMEs. Through these agreements with local governments, SMEs will be supported to subscribe to trade credit insurance without bearing the insurance premium burden.

Plans are also being developed to give preferential treatment to startups and social economy enterprises in public insurance products. The 'High Option Type Insurance' targeting medium-sized enterprises with high job creation effects will also be expanded up to 200 billion won.

A Korea Credit Guarantee Fund official emphasized, "Trade credit insurance is the optimal product to prepare for insolvency caused by uncollected credit sales and to prevent chain bankruptcies during a period when prolonged economic recession due to COVID-19 is a concern," adding, "The Korea Credit Guarantee Fund will fulfill its role to protect SMEs and stabilize the economy."

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