Shinhan Credit Guarantee Fund and Gimpo City Sign 'Accounts Receivable Insurance Business Agreement'

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[Asia Economy Reporter Park Sun-mi] On the 23rd, the Korea Credit Guarantee Fund (KODIT) and Gimpo City announced that they have signed a "Trade Credit Insurance Premium Support Agreement" to prevent a chain bankruptcy of small and medium-sized enterprises (SMEs) located in Gimpo City, which are struggling due to COVID-19, and to stabilize the local economy.

According to this agreement, KODIT will offer a 10% discount on trade credit insurance premiums, and Gimpo City will contribute 50 million KRW to KODIT to support 70% of the final calculated premium, up to a limit of 1 million KRW per company. The support targets SMEs located in Gimpo City with annual sales under 3 billion KRW.

Since May of last year, KODIT has signed "Trade Credit Insurance Premium Support Agreements" with 11 local governments including Gimpo City, and so far, over 800 SMEs have subscribed to trade credit insurance worth 3.3 trillion KRW through premium support.

Trade credit insurance is a public insurance program operated by KODIT under the commission of the Ministry of SMEs and Startups, which guarantees the risk of credit transactions between companies. It compensates up to 80% of losses incurred when a company that has sold goods or services on credit fails to collect payment from its trading partner.

A KODIT official stated, "Trade credit insurance is the optimal product to protect SMEs from the risk of chain bankruptcies caused by COVID-19," and added, "We hope that through this agreement, more small and medium-sized enterprises located in Gimpo City will be able to subscribe to insurance without burden and conduct their business activities stably."

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