Ministry of SMEs and Startups Provides 1 Trillion Won Special Guarantee for Medium and Low Credit Small Business Owners

[Asia Economy Reporter Lee Junhyung] The Ministry of SMEs and Startups announced that it will implement a 1 trillion won scale 'Special Guarantee for Medium- and Low-Credit Small Business Owners' starting from the 5th.

The Ministry of SMEs and Startups launched this special guarantee product to provide urgent financial support to small business owners whose sales and credit have declined due to the prolonged COVID-19 pandemic. The support targets small business owners in general industries with medium- and low-credit (credit score of 839 points or below, credit rating of grade 4 or lower) who have received the Emergency Relief Fund Plus due to decreased sales.

The Ministry will provide up to 20 million won for five years through guarantee screening by regional credit guarantee foundations. Even if there is a history of loan delinquency, the special guarantee will apply if the delinquency has been resolved as of the guarantee screening date, allowing guarantee support.

Additionally, through continuous consultations with financial institutions, the Ministry will apply a low loan interest rate of around 2.3% regardless of the small business owners' credit rating. The guarantee fee (0.8%) paid to the regional credit guarantee foundation will be waived in the first year. From the 2nd to 5th year, the guarantee fee will be reduced by 0.2 percentage points from 0.8% to 0.6%, minimizing the financial burden on small business owners, according to the Ministry.

Small business owners wishing to receive this special guarantee can apply at any of the 16 regional credit guarantee foundations nationwide or at branches of 13 commercial banks.

Kwon Younghak, head of the Corporate Finance Division at the Ministry of SMEs and Startups, said, "For small business owners whose sales have decreased, there can be a vicious cycle where creditworthiness declines due to increased borrowing, making bank loans difficult." He added, "We hope this special guarantee will help stabilize the management of medium- and low-credit small business owners."

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