Closure Small Business Guarantee 'Connection', 'Bridge Guarantee' to Support Recovery Implemented in July

[Asia Economy Reporter Kim Jong-hwa] The "Bridge Guarantee," a bridging guarantor that connects the guarantee of a closed business owner to a personal guarantee, will be implemented starting in July.

It targets individuals whose business has closed, with a personal credit score in the bottom 5% or annual income of 80 million KRW or less, providing support within the scope of the existing business loan balance. Instead of a lump-sum repayment method, it uses a small installment repayment method within 5 years to minimize the individual's repayment burden.

The Ministry of SMEs and Startups announced that it will enforce the amendment to the "Regional Credit Guarantee Foundation Act Enforcement Decree" from the 29th to enable small business owners who have received guarantee support from regional credit guarantee foundations to continue receiving financial support even after business closure.

Until now, if a person who received a business guarantee from a regional credit guarantee foundation closed their business and failed to repay the loan at maturity, they were registered in credit judgment information (bad credit information), negatively affecting their credit and making it difficult to attempt a restart.

To resolve this, the guarantee target has been expanded to include "individuals" so that small business owners who received guarantee support from regional credit guarantee foundations can continue to receive financial support even after business closure.

In March, the Ministry of SMEs and Startups, through continuous communication with financial authorities such as the Financial Support Committee, took measures to allow banks to convert business operating funds of closed business owners into household funds, and continuously negotiated to set interest rate caps and issue guarantees to alleviate the burden on small business owners.

Based on this, the "Bridge Guarantee" product will be launched in July. The support scale is 500 billion KRW, and the guarantee period can be selected in one-year increments within 5 years. The operation period is from next month until December of next year, and consultations and applications are available through 16 regional credit guarantee foundations nationwide.

No Yong-seok, Director of Global Growth Policy at the Ministry of SMEs and Startups, said, "There was a concern that small business owners who closed their businesses during the credit guarantee period of regional credit guarantee foundations and had no repayment capacity would be registered in credit judgment information and lose the opportunity to restart," adding, "We hope the Bridge Guarantee will help small business owners overcome the crisis caused by COVID-19."

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