"'2 Jo Dolae' Loan Maturity Extension Ending Soon, Shinbo Junganghoe Strengthens Risk Management"

Shinbo Central Association to Hold Press Conference with Reporters on the 19th
Total Maturity Extension 26.7 Trillion Won... Loss Rate Expected to Increase
Special Guarantee Expansion to Overcome COVID-19

A bank counter scene in downtown Seoul. / Photo by Jinhyung Kang aymsdream@

With just over two months remaining until the expiration of the loan maturity extension for small business owners, the Korea Credit Guarantee Fund (KCGF) announced plans to strengthen its guarantee risk management. Alongside this, it will expand the special guarantee system to help overcome COVID-19 and alleviate the management difficulties faced by small and micro enterprises.

On the 19th, KCGF held a press briefing at the Korea Federation of SMEs in Yeouido, Seoul, where it revealed measures to manage guarantee risks, including strategies to address the occurrence of non-performing loans after the loan maturity extension ends in September.

According to KCGF, the total amount of maturity extensions granted by regional credit guarantee foundations nationwide stands at 26.7 trillion KRW. The amount of loans maturing in the second half of this year is expected to be 4.1 trillion KRW, with nearly half?1.9 trillion KRW?due after September. KCGF stated, "The current subrogation payment rate (loss rate) is 1.0%, but it is expected to increase after September. We will monitor changes in credit risk and subrogation payment rates, classify companies into three groups based on their repayment capacity, and determine response strategies accordingly." During the global financial crisis in 2008, the subrogation payment rate surged from 1.3% to 3.0% two to three years later.

Additionally, starting from the 18th, KCGF raised the guarantee limit for the ‘Hope Plus Special Guarantee’ and expanded its eligibility. Small business owners with medium credit ratings who receive the Hope Plus Special Guarantee can now obtain an additional 10 million KRW in guaranteed loans. The support target has been broadened from recipients of quarantine support funds to those receiving loss compensation funds, and low-credit small business owners who have received Hope Loans from the Small Enterprise and Market Service can also receive an additional special guarantee with a limit of 10 million KRW.

Lee Sang-hoon, President of KCGF, stated, "With the improvement of the special guarantee system, we hope to ease the financial difficulties of small and micro enterprises affected by the prolonged COVID-19 pandemic and help stabilize their management." Furthermore, to provide a second chance for small and micro enterprises seeking to restart after closure, a ‘Re-Startup Special Guarantee’ worth 1 trillion KRW will be implemented from the end of this month.

Next year, KCGF plans to build its own regional credit guarantee foundation application to expand the non-face-to-face guarantee system. The procedures, which previously took several days from consultation to document submission and contract signing, will be shortened to within 10 to 15 minutes. Efforts will also be made to develop new statistics using data held by regional credit guarantee foundations. By examining changes in sales and employee numbers after guarantee support, the policy’s effectiveness will be assessed, and plans are underway to investigate and analyze the management status of companies using regional credit guarantees for the first time.

Meanwhile, KCGF explained, "As a specialized guarantee institution for small business owners during the COVID-19 period, the guarantee balance has nearly doubled from 23 trillion KRW before COVID-19 to 45.5 trillion KRW as of June." It added, "This year, we plan to maintain the expansion trend by increasing the guarantee scale to 49.4 trillion KRW."

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