Incheon City Provides Additional 500 Billion KRW in Management Stabilization Funds to Small and Medium Enterprises

Incheon City Hall

[Asia Economy Reporter Park Hyesook] Incheon City will provide an additional 500 billion KRW in management stabilization funds to alleviate the financial difficulties of small and medium-sized enterprises (SMEs) exacerbated by the 'three highs' phenomenon of high interest rates, high exchange rates, and high inflation.

On the 4th, the city announced that it will expand support for SME management stabilization funds from the original 1 trillion KRW to 1.5 trillion KRW to help recover the livelihood economy.

The additional 500 billion KRW will be allocated as follows: ▲Interest rate differential compensation 290 billion KRW ▲Accounts receivable insurance 200 billion KRW ▲Agreement guarantee 10 billion KRW.

Interest rate differential compensation is a system that compensates part of the interest (basic + preferential / up to 3.0%p) incurred during bank cooperative loans.

Due to the recent sharp rise in the base interest rate, the interest burden on SMEs, whose loan interest rates are mainly variable, has increased, leading to a rise in differentiated interest support rates by company. Accordingly, Incheon City decided to expand the support scale to reduce the financial cost burden on companies. Originally, the interest rate differential compensation was 910 billion KRW this year, but with this expansion, it will increase to a total of 1.2 trillion KRW.

Accounts receivable insurance will also be additionally supported at a scale of 200 billion KRW, four times the original target of 50 billion KRW.

The demand for accounts receivable insurance premium support, provided jointly with the Korea Credit Guarantee Fund, surged significantly as SMEs sought to prepare for defaults such as non-payment of receivables due to the prolonged COVID-19 pandemic, leading to early depletion in the first half of the year. Accordingly, the guarantee amount for accounts receivable insurance has been expanded to 250 billion KRW by the end of this year.

Additionally, agreement guarantee support will be increased by 10 billion KRW. This project supports SMEs with technological capabilities but insufficient credit, making loans difficult, by providing guarantee support for working capital loans up to 1 billion KRW (100% guarantee ratio) in cooperation with the Korea Technology Finance Corporation.

To overcome the economic crisis and prepare for the transition to a future-leading economy, the support target has been expanded to include companies engaged in future strategic industries such as semiconductors. As the original target of 40 billion KRW is nearing depletion, it will be expanded to 50 billion KRW.

The eligibility and conditions for management stabilization fund support can be found on the Incheon City website, and applications are accepted online.

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