Ruling Party and Government: "High-interest loans over 5% for SMEs to be reduced by up to 2%p... 76 trillion won corporate finance support" (Update)

On the 14th, the ruling party and the government presented a customized corporate finance support plan worth 19.4 trillion won to alleviate the high-interest burden on small and medium-sized enterprises (SMEs) and mid-sized companies, and 56.3 trillion won for the transition to new industries.

The People Power Party, financial authorities, and the banking sector held a meeting at the National Assembly on the same day to discuss the "Customized Corporate Finance Support Plan to Overcome the High-Interest Crisis and Transition to New Industries," announcing a total support plan worth 76 trillion won.

Yu Ui-dong, the Policy Committee Chairman of the People Power Party, said after the meeting, "We have decided to supply 19.4 trillion won to reduce the high-interest burden on SMEs and mid-sized companies and to establish a foundation for their swift normalization and recovery." He added, "In particular, we will establish a special interest rate reduction program exclusively for SMEs jointly by banks, worth 5 trillion won, to lower loan interest rates by up to 2 percentage points for one year on high-interest loans exceeding 5%." Furthermore, "Depending on the interest rate situation, we will supply 2 trillion won worth of low-interest fixed-rate products that allow switching between variable and fixed interest rates, and provide 11.3 trillion won in policy financial support to alleviate the high-interest burden." He also stated, "For SMEs temporarily experiencing liquidity shortages, we plan to operate a 3 trillion won program for rapid normalization financial support, including exemption from additional interest rates."

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To facilitate the transition to new industries, the ruling party and government decided to support advanced industries requiring large-scale facility investments, such as semiconductors and secondary batteries, with more than 20 trillion won in funding. They will establish a 5 trillion won supply chain stabilization fund to support domestic returnee companies. They plan to provide 15 trillion won each to semiconductor and secondary battery leading companies with a significant competitive edge and to mid-sized companies that serve as the backbone of the industry.

For mid-sized companies that have played a central role in the industrial ecosystem but have been neglected in policy support, a 5 trillion won fund exclusively for mid-sized companies will be jointly established by the five major banks to provide support. A 2 trillion won corporate bond securitization program will be operated, direct financing for mid-sized companies engaged in advanced and strategic industries will be supported, and a customized guarantee program worth 2 trillion won will be supplied, segmented by stages during the growth process from SMEs to mid-sized companies.

Additionally, preferential interest rate funds worth 5 trillion won will be supplied to SMEs expanding their business into new industries, and policy financial institutions will provide 16.3 trillion won in policy finance to support SMEs entering new industries and technology-based funding.

Chairman Yu stated, "The 76 trillion won plan includes 20 trillion won from the five major banks, with private banks actively participating in customized corporate support." He added, "The government will also rationalize regulations related to corporate finance and promote institutional improvements to efficiently provide corporate finance, thereby supporting banks' independent activation of corporate finance."

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