Songpa-gu Provides 12 Billion Won Loan Support to Small and Medium Enterprises This Year

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Songpa-gu (District Mayor Seo Gang-seok) announced that starting from February, it will provide loan support totaling 12 billion KRW to small and medium-sized enterprises (SMEs) in the area facing financial difficulties.

The district has been operating a separate fund for local SMEs since 1993, and in 2018, it expanded the fund size more than threefold through a business agreement with financial institutions. Last year, loans totaling 4.4 billion KRW were provided to 28 companies, and 70 million KRW was supported as interest subsidy for cooperative funds to reduce the interest burden on companies.

This year’s loan support is divided into two types according to the support schedule and loan interest rate: the SME Development Fund, which offers loans at a low interest rate of 1.5% per annum, and the Cooperative Fund, which compensates for the interest rate difference.

The SME Development Fund can be applied for after prior consultation with banks starting February 3, and it has attracted significant interest as the funds are usually exhausted during the first half of each year due to the low 1.5% interest rate loans. Since rapid depletion is expected again this year, it is advantageous to apply in advance by judging the timing of fund needs.

The Cooperative Fund support is scheduled to be announced in the second half of this year. With a scale of 8 billion KRW, the district will support up to 2% of the interest costs incurred when companies borrow funds.

Eligible applicants are SMEs that have been registered in Songpa-gu for more than six months, have sales performance, and have collateral capacity according to bank credit regulations. Support of up to 200 million KRW per company is available with a repayment plan of 2 years grace period and 3 years equal installment repayment. However, companies currently repaying or who have repaid the SME Development Fund within 6 months from the announcement date, companies repaying the Cooperative Fund, companies with national or local tax arrears, and industries excluded from loan support are not eligible. The use of funds is limited to pure business purposes such as working capital, facility funds, and technology development funds, and cannot be used for private purposes such as loan repayment.

Collateral capacity can be confirmed through prior consultation at the ‘Woori Bank Songpa-gu Office Branch’ located on the first floor of the district office main building. Applications can be submitted by visiting the Economic Promotion Division on the 8th floor of Songpa-gu Office with the required documents. For more detailed information such as required documents and excluded industries, please check the ‘Notices and Announcements’ section on the district website.

Additionally, the district operates a principal repayment deferral system for companies facing double hardships due to management difficulties and debt repayment. Companies that borrowed from the SME Development Fund and whose principal repayment is due this year can defer principal repayment for up to one year.

Seo Gang-seok, Mayor of Songpa-gu, stated, “Through low-interest loan support and repayment deferral, we aim to provide practical help to local SMEs struggling with financing.” He added, “The district will implement multifaceted support measures to help SMEs and small business owners, the backbone of the local economy, overcome this difficult period.”

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