Special Fund Supply of 93 Trillion Won for SMEs and Mid-sized Companies Ahead of Seol Holiday

The financial sector is expanding funding supply to small and medium-sized enterprises (SMEs) and mid-sized companies in celebration of the Lunar New Year holiday.

Two days before the Lunar New Year holiday, the Cheongnyangni Fruit and Vegetable Market in Seoul is bustling with citizens buying ritual items. Photo by Heo Younghan younghan@

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According to financial authorities on the 5th, policy financial institutions such as the Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund will provide special loans and guarantees worth 14.4 trillion KRW to SMEs and mid-sized companies by the 27th, in preparation for the expected increase in funding needs before and after the Lunar New Year holiday.

The Korea Development Bank will supply a total of 1.2 trillion KRW (700 billion KRW new loans, 500 billion KRW extensions) for working capital through branch consultations and on-site inspections, offering interest rate reductions of up to 0.6 percentage points. The Industrial Bank of Korea will also provide loans up to 300 million KRW per company for working capital purposes such as raw material payments and employee salaries and bonuses, supplying a total of 9 trillion KRW (3.5 trillion KRW new loans, 5.5 trillion KRW extensions), with interest rate reductions of up to 0.3 percentage points for settlement-related loans.

The Korea Credit Guarantee Fund will supply guarantees totaling 4.2 trillion KRW (800 billion KRW new, 3.4 trillion KRW extensions). It will simplify the screening process for currently operated special and preferential guarantee programs and offer preferential terms on guarantee fees, ratios, and limits.

The banking sector, based on the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori), plans to supply a total of 78.8 trillion KRW (31.6 trillion KRW new loans, 47.2 trillion KRW maturity extensions) to SMEs by the 29th, reflecting interest rate benefits based on transaction contributions and credit ratings before and after the Lunar New Year holiday.

Each financial sector will also expand consumer finance convenience during the Lunar New Year holiday. The card industry will pay funds to small card merchants up to 5 days earlier. For approximately 444,000 small merchants, card payment funds incurred before or during the holiday will be promptly paid without separate application.

If the card payment date is on the 6th, the payment will be shortened by 5 days to the 8th; payments on the 7th and 8th will be shortened by 1 day and paid on the 13th and 14th, respectively. Payments made during the holiday period from the 9th to the 12th will also be paid one day earlier on the 14th.

Additionally, if loan repayment maturities fall during the Lunar New Year holiday, the maturity will be automatically extended to the 13th without overdue interest. Early loan repayments can be made on the 8th without prepayment penalties upon consultation with the financial institution.

If card payment due dates fall during the holiday, payments will be automatically withdrawn from customers’ payment accounts on the 13th without late fees. Similarly, automatic payments for insurance premiums, telecommunications fees, and utility bills scheduled during the holiday will be postponed until after the holiday.

Furthermore, the Korea Housing Finance Corporation plans to pay housing pensions early on the 8th to all customers whose payment dates fall during the holiday. All financial companies also plan to refund deposits maturing during the holiday on the 13th, including interest accrued during the Lunar New Year period. Depending on the product, payments can also be made on the 8th upon customer request.

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