Supporting SME Liquidity Challenges Resolution through 'Maeul Chaegwon Factoring'
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[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Lee Young, hereinafter referred to as the Ministry) and the Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced on the 20th that the newly launched 'SME Accounts Receivable Factoring' (hereinafter referred to as Factoring) project has disbursed 19 billion KRW, more than half of the 37.5 billion KRW budget, within four months of its commencement.
The SME Accounts Receivable Factoring project is a support system in which SBC advances payment for accounts receivable (transaction payments) held by SMEs, enabling rapid monetization of accounts receivable by shortening payment terms that can exceed three months. Additionally, the Ministry and SBC's factoring service operates without recourse, preventing chain bankruptcies caused by the insolvency of purchasing companies from affecting selling companies, thereby serving as a trade safety net.
In response to recent worsening domestic and international economic conditions such as semiconductor supply shortages and soaring raw material prices, SBC has accelerated disbursement to alleviate short-term liquidity difficulties faced by SMEs. Furthermore, a 100% online and non-face-to-face support system has been established, minimizing required documents to improve SME accessibility, and payments are made within 3 to 4 days after application, enhancing usability for SMEs needing short-term liquidity.
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The Ministry and SBC's factoring service improves evaluation accuracy by utilizing information analyzed from big data held by private fintech companies through collaboration. Plans are in place to expand private partnerships in the future. Chairman Kim Hak-do stated, "SBC not only supports the sustainable growth of SMEs through long-term, low-interest loans but also significantly contributes to resolving SMEs' funding difficulties by supplying short-term liquidity through factoring. We will focus the institution's capabilities to ensure SMEs can confidently reinvest factoring funds into production activities, thereby revitalizing the national economy as a whole."
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