Daegu City Mobilizes All Efforts to Support SMEs and Small Business Owners... Financial Support Measures Prepared

Guarantee Issued for 1.31 Trillion KRW in Crisis Overcoming Funds for Local Businesses

Daegu City Hall.

[Asia Economy Yeongnam Reporting Headquarters Reporter Yeo Jong-gu] Daegu City has prepared comprehensive financial support measures for small business owners who have been affected by the prolonged COVID-19 pandemic and strengthened quarantine measures.

On the 10th, Daegu City announced, "We will focus financial support on supplying liquidity and strengthening safety nets to help local small and medium-sized enterprises (SMEs) and small business owners recover from damages."

First, to stabilize the management of small business owners and recover the local economy, a total of 1.31 trillion KRW in guarantees will be supplied through the Daegu Credit Guarantee Foundation, an increase of 49 billion KRW compared to the previous year.

This guarantee amount consists of 400 billion KRW in new guarantees and 910 billion KRW in maturity extensions, expected to help small business owners with liquidity needs such as new guarantee demands and maturity extensions.

Additionally, to provide emergency liquidity support for SMEs and small business owners in financial blind spots, a new "Small Business Daily Recovery Dream (Dream) Special Guarantee" worth 100 billion KRW was established and has been in effect since the 3rd of this month.

With no guarantee, no collateral, and no screening, local businesses (SMEs and small business owners) can receive up to 10 million KRW per company.

The guarantee fee rate is 0.8%, but with a 0.2% reduction from the government for one year, it is 0.6%. Furthermore, linked with SME management stabilization funds, a special preferential interest support of 2.2% for one year is provided.

In case of small business closure, a personal guarantee conversion bridge guarantee worth a total of 25 billion KRW will also be supported to extend the existing guarantee maturity, enabling normal repayment and re-advancement of small business owners.

To secure liquidity for local SMEs, mid-sized enterprises, and small business owners struggling with financing due to COVID-19, SME management stabilization funds worth 1 trillion KRW will be supported.

This will be divided into 695 billion KRW in the first half and 305 billion KRW in the second half, with partial loan interest support (1.3~2.2%) for one year.

As facility investment demand is expected to gradually increase with economic recovery prospects, 55 billion KRW for startup and competitiveness enhancement funds will be supported at low interest rates (1.95~2.45%) and long-term repayment (3 years grace period, 7 years equal repayment).

Moreover, to alleviate the repayment burden of companies facing financial difficulties, companies using funds from January to June this year will be supported with up to six months of repayment deferral and maturity extension.

To secure transaction safety nets and activate credit transactions for companies, the city will contribute 200 million KRW to the Korea Credit Guarantee Fund this year to provide continuous support for accounts receivable insurance premiums.

SMEs engaged in local industries (automotive parts, textile fashion, robotics, optical instruments, etc., totaling 628 industries) receive a 10% discount on insurance premiums from the Korea Credit Guarantee Fund when subscribing to insurance, and can additionally receive 50% of the remaining premium (up to 2.5 million KRW per company) as support.

Also, the Yellow Umbrella Mutual Aid Hope Incentive, a public mutual aid system to reduce social costs and establish a social safety net for business re-start in cases of business failure such as closure, old age, or death of small and micro businesses, has been expanded by 1.7 billion KRW compared to the previous year to a total of 3 billion KRW.

New subscribers since July last year can receive support up to 480,000 KRW.

Mayor Kwon Young-jin of Daegu said, "I hope this will be a small help to SMEs and small business owners who are still facing difficult local economic conditions this year," and added, "We will continue to devise multifaceted support measures."

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