New Policy: 2.5 Trillion Won Guarantee Support for SMEs and Small Business Owners

Special Contribution Fund of About 2.5 Trillion Won from Banks for Guarantee Support
Alleviating Financial Burden for SMEs and Small Business Owners, Easing Smooth Fundraising 'Breath of Relief'

The Korea Credit Guarantee Fund (Chairman Choi Won-mok) announced on the 18th that it has implemented approximately 2.5 trillion KRW in ‘Special Contribution Guarantee for Small and Medium Enterprises (SMEs) and Small Business Owners.’

This guarantee agreement is part of the ‘Bank Social Responsibility Project’ announced last February and is a follow-up measure to the ‘Financial Support Business Agreement for Coexistence and Cooperation with SMEs and Small Business Owners’ signed with the Korea Federation of Banks on the 17th.

The Credit Guarantee Fund will support the guarantee by receiving 208 billion KRW over four years from the 240 billion KRW fund prepared by 15 member banks of the Federation to strengthen social responsibility through the social return of profits and to improve financial accessibility for vulnerable borrowers.

Using 160 billion KRW in special contributions and 48 billion KRW in guarantee fee subsidies, the Fund plans to focus support on SMEs struggling with high interest rates and small business owners with high future growth potential but insufficient funding capacity.

First, through the ‘Special Contribution Guarantee to Reduce Financial Costs for SMEs,’ a total of 1.44 trillion KRW in guarantees will be provided over four years, with a maximum limit of 1 billion KRW for SMEs experiencing decreased sales or increased interest expenses. Various preferential benefits such as preferential guarantee rates and fees for three years and a 1.1% annual point guarantee fee subsidy will be offered, which is expected to substantially contribute to alleviating funding shortages and reducing financial costs for SMEs.

The ‘Customized Special Contribution Guarantee for Small Business Owners,’ supported on a scale of 1 trillion KRW, is divided into the ‘Growth-Promising Small Business Owner Guarantee’ and the ‘Small Business Owner Development Guarantee.’

The ‘Growth-Promising Small Business Owner Special Guarantee’ targets small enterprises focused on fostering new growth engines, such as companies in promising new growth industries, exporters, and venture companies. The ‘Small Business Owner Development Special Contribution Guarantee’ offers preferential treatment such as increased guarantee ratios and a 0.3% reduction in guarantee fees for individual enterprises with sales under 1 billion KRW, excluding household-type industries.

Chairman Choi Won-mok stated, “We will actively support the alleviation of financial cost burdens and smooth funding for companies,” adding, “Going forward, the Credit Guarantee Fund will continue to fulfill its role as a policy financial institution to help SMEs recover competitiveness and revitalize the economy.”

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