Ministry of the Interior and Safety Supports 5,700 Small Business Owners with Low-Interest Hope Loans... 110.7 Billion Won Loaned

Contributing to the Elimination of Financial Blind Spots
Selected 12 Outstanding Local Governments to Share Best Practices and Provide Financial Incentives

[Asia Economy Reporter Lim Cheol-young] The Ministry of the Interior and Safety announced on the 26th that through the '2021 Regional Small Business Hope Loan Project,' which was implemented for the first time this year to help small business owners facing economic difficulties due to COVID-19, loans totaling 110.7 billion KRW were provided to over 5,700 small business owners.

The Regional Small Business Hope Loan Support Project is an expansion nationwide based on the '1% Hope Loan Project' first attempted by Gwangju Gwangsan-gu last year, which achieved great results. This project is characterized by significantly enhancing the support effect for small business owners by establishing an autonomous and sustainable governance through collaboration among the private sector, government, industry, and finance, moving away from unilateral financial support.

The Ministry of the Interior and Safety selected the Regional Small Business Hope Loan Support Project as one of the '7 Major Focus Tasks for Resident Life Innovation in 2021' and supported 21 local governments with 615 million KRW in national funds to promote nationwide expansion and establishment. Through this, loans were realized for small business owners who are struggling due to decreased sales caused by the prolonged COVID-19 pandemic but cannot cross the bank threshold due to lack of collateral and low credit ratings.

In particular, support was provided to about 770 low-credit (grades 6?10) small business owners who face difficulties in normal financial activities, such as suspension of credit card issuance. In addition, support was given to small business owners facing difficulties through interest subsidy and guarantee fee support.

Meanwhile, despite difficult conditions, the Ministry plans to select 12 local governments that led the COVID-19 economic crisis response by supporting low-credit small business owners and provide a total of 3 billion KRW in financial incentives. The 12 selected local governments received excellent evaluations in areas such as ▲building sustainable governance ▲resolving financial blind spots for low-credit individuals ▲discovering creative policies reflecting regional characteristics.

The grand prize was awarded to three local governments: Gwangju Dong-gu, Namhae-gun in Gyeongnam, and Gwangju Gwangsan-gu, the pioneering institution that first planned the project. Gwangju Dong-gu received high marks in governance construction by actively involving local community finance institutions such as village banks and credit unions and having financial institutions share contributions. Additionally, it showed excellent support performance for low-credit small business owners by selecting and focusing support on 100% of them.

Namhae-gun in Gyeongnam achieved tangible effects by having the Namhae Credit Cooperative bear the risk of non-performing loans and providing unsecured, interest-free loans at 7.5% interest for one year to low-credit small business owners in urgent need of funds. Furthermore, governance was activated by frequently holding communication forums centered on the Small Business Federation.

Jeonnam Haenam-gun, which won the excellence award, received good evaluations in governance construction and policy creativity by actively involving nine community finance institutions such as credit unions and Saemaeul Geumgo within the jurisdiction and preparing small business support measures tailored to regional characteristics centered on the Economic Revitalization Council. Daejeon Daedeok-gu and Gangwon Jeongseon-gun were highly recognized for their local government achievements and 'efforts' by actively utilizing their own governance and focusing support on low-credit individuals despite relatively poor financial conditions compared to local governments of the same type.

The Ministry of the Interior and Safety plans to carefully analyze the project's outcomes and field opinions to prepare a larger-scale and more tangible project plan in the future. In addition, it intends to continuously discover innovative local government cases like the 'Gwangju Gwangsan-gu 1% Hope Loan' and expand them nationwide.

Minister Jeon Hae-cheol stated, “I am glad that the support project could somewhat alleviate the worries of small business owners who are facing great difficulties due to COVID-19,” and added, “We will actively support the preparation of various regional small business support measures so that more small business owners can overcome the COVID-19 economic crisis and achieve management stability and independence.”

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