Government Expands Mid-Rate Loans to 31.9 Trillion Won... Easing Interest Burden for Mid-Credit Borrowers

Saitdol Loan Revamp: Focused Supply for Medium-Credit Borrowers
Expanded Incentives for Private Sector Mid-Interest Loans, Promoting Lower Rates
KB Financial Group to Invest 17 Trillion Won in KB National Happiness Hope Project by 2030

The government will provide a total of 31.9 trillion won in mid-rate loans this year at lower interest rates to borrowers with medium credit scores. The Saitdol Loan program will be restructured to focus on medium-credit borrowers, and a dedicated product for sole proprietors will also be launched. This is intended to address the so-called "blind spot," where medium-credit borrowers have been subject to higher interest rates than high-credit borrowers or have been excluded from policy loan products intended for low-credit individuals, by supplying funds at lower interest rates.

Lee Okwon, Chairman of the Financial Services Commission, is delivering the opening remarks at the 5th Productive Finance Grand Transition Meeting held at the Bankers Hall in Jung-gu, Seoul on April 16, 2026. Photo by Kang Jinhyung

The Financial Services Commission announced on April 27 at the KB Hope Finance Center in Dongjak, Seoul, that it discussed the "Plan to Promote Mid-Rate Loans" during the 4th Inclusive Finance Grand Transition Meeting.

Lee Okwon, Chairman of the Financial Services Commission, remarked, "In the credit loan market, the group that forms the core is medium-credit borrowers," and added, "However, due to the current challenging economic situation, the burden on the public has increased, and this impact has been particularly pronounced among medium-credit borrowers."

The government plans to restructure the supply system for Saitdol Loans so that over 70% of the total loans will be concentrated on medium-credit borrowers in the bottom 20-50% credit range. In addition, the Seoul Guarantee Insurance premium rate will be reduced by up to 5.2 percentage points, allowing for the supply of sufficient funds at even lower interest rates. As a result, the scale of supply is expected to expand by up to approximately 100 billion won.

Low-credit borrowers in the bottom 20% credit range will be supported through policy-based microfinance rather than Saitdol Loans. The government will provide a total of 12 trillion won in policy funds by 2026, and the interest rate for the Sunshine Loan will be lowered from the current 15.9% to 12.5%, making more funds available at lower interest rates.

A dedicated Saitdol Loan product reflecting the characteristics of sole proprietors will also be introduced. As a result, medium-credit sole proprietors will be able to secure funds up to a higher limit (increased from 20 million won to 30 million won) at a lower interest rate compared to existing products. In addition, the institutions handling Saitdol Loans will be expanded beyond banks, mutual finance, and savings banks to include credit card companies and specialized credit finance companies such as capital firms. The financial authorities expect that this will enable an additional annual supply of up to 500 billion won, while the increase in products offering interest rates in the 8-12% range will help alleviate the interest rate stratification issue.

The private sector mid-rate loan system will also undergo major improvements. One reason financial institutions have been reluctant to actively provide mid-rate loans is that the criteria for recognizing a loan as "mid-rate" have been out of touch with market realities.

Accordingly, moving forward, the cost of funds will be reflected annually, and factors such as the exclusion of deposit insurance premiums will be incorporated to rationalize the calculation formula, provisionally lowering the interest rate standards for each industry by up to 1.25 percentage points. This will create conditions for financial companies to provide mid-rate loans under more realistic standards.

Additionally, mid-rate loans in the secondary financial sector will be divided into "Mid-Rate Loan 1" and "Mid-Rate Loan 2," and additional incentives will be provided if the loans are offered at rates more than 3 percentage points lower than before.

At the same time, regulatory incentives for private sector mid-rate loans will also be expanded. Some household loan regulations will be eased, and financial companies will be required to publicly disclose their supply targets in advance, encouraging market competition in terms of interest rates and supply scale. The same mandatory mid-rate loan ratio and supply limit incentives will apply to linked investments between savings banks and online investment-linked finance (P2P lending), with the aim of facilitating an additional supply of about 500 billion won within the year.

Meanwhile, KB Financial Group, which attended the meeting, announced that it will implement the "KB National Happiness Hope Project" to expand inclusive finance for young people and low-income groups, planning to provide a total of 17 trillion won in financial support by 2030. Of this amount, 10.5 trillion won will be specifically allocated to support low-income and vulnerable groups.

The banking sector also announced plans to expand financial support for social solidarity economy organizations. A total of 4.3 trillion won (an annual average of 1.4 trillion won) will be supplied from this year until 2028, which is about an 18% increase compared to the past three years. Additionally, social solidarity finance will be strengthened through the establishment of dedicated departments, increased special contributions linked to guarantee institutions, and expanded support for social enterprises.

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