Small and Medium Business Accounts Receivable Insurance Premiums Supported up to 90%... Gyeongbuk Province, Shinhan Bank, and Credit Guarantee Fund Sign Business Agreement

Shinhan Bank, 1% Reduction in Loan Interest Rates

Lee Cheol-woo: "No Bankruptcies Among Small and Medium Enterprises"

Gyeongbuk Province has decided to expand support for trade credit insurance premiums for small and medium-sized enterprises (SMEs) up to 90% to stabilize their management. On the 10th, at the provincial government office's Sarim Room, it signed a “Business Agreement on Supporting Trade Credit Insurance Premiums for Stable Trade Transactions of SMEs” together with the Korea Credit Guarantee Fund and Shinhan Bank.

Previously, SMEs in the Gyeongbuk area who subscribed to trade credit insurance bore 40% of the insurance premium themselves. However, under this agreement, Shinhan Bank will additionally support up to 30% (up to 4.5 million KRW per company), reducing the self-payment ratio to 10%.

Choi Wonmok, Chairman of the Korea Credit Guarantee Fund (left in the photo), Lee Cheol-woo, Governor of Gyeongbuk Province (center in the photo), and Kim Yoonhong, Vice President of Shinhan Bank's Corporate Division, are signing a business agreement to support insurance premiums for small and medium-sized enterprises' accounts receivable.

Furthermore, the agreement includes cooperation to provide up to a 1% reduction in loan interest rates when companies with trade credit insurance take out loans from Shinhan Bank.

Trade credit insurance is a public insurance system operated by the Korea Credit Guarantee Fund that compensates up to 80% of losses if SMEs fail to collect payments after delivering goods to their clients.

A Gyeongbuk Province official stated, “Approximately 900 SMEs in the Gyeongbuk area are subscribed to trade credit insurance. Although the annual premium varies depending on sales, it is known to average around 3.5 million KRW. SMEs only need to bear 10% of this premium.”

Since 2020, Gyeongbuk Province has been implementing a “Trade Credit Insurance Premium Support” project that supports 50% of the premium up to 3 million KRW per company and provides an upfront 10% discount on the initially calculated premium by the Korea Credit Guarantee Fund.

From 2020 to the present, Gyeongbuk Province has supported 2.4 billion KRW in trade credit insurance premiums, and local SMEs have received 4 billion KRW in insurance payouts, demonstrating the effectiveness of the premium support project.

Last year, the scale of trade credit insurance subscriptions in Gyeongbuk accounted for 13.9% nationwide, ranking highest among regions outside the metropolitan area (Seoul 15.9%, Gyeonggi 16%, Incheon 14.2%), which is expected to bring significant benefits to local SMEs.

Under this agreement, when SMEs subscribe to trade credit insurance, the Korea Credit Guarantee Fund will provide an upfront 10% discount on the initially calculated premium; after applying upfront discounts from Gyeongbuk Province and city/county governments, 50-70% of the final premium will be supported (additional support varies by city/county); and Shinhan Bank will support up to 30% (with a mandatory 10% company contribution), significantly reducing the actual premium burden for companies to about 10-20%.

Through this, companies are expected to pursue more aggressive market expansion without worrying about collecting payment for delivered goods.

Lee Cheol-woo, Governor of Gyeongbuk Province, said, “Uncertainty in the global economic situation remains, and with an expected economic downturn in the second half of the year, the anxiety felt by local SMEs will increase. Statistics show that if one company goes bankrupt, 12 companies trading with it may also face chain bankruptcies. We will make every effort to ensure that not a single SME in Gyeongbuk goes bankrupt by implementing various policies.”

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