Assemblyman Won Kim Proposes Amendment to the Regional Credit Guarantee Foundation Act

Won Kim, a member of the National Assembly from the Democratic Party of Korea, has initiated an amendment to the law aimed at stabilizing guarantee funding for small business owners.

Assemblyman Kim sponsored the partial amendment to the “Regional Credit Guarantee Foundation Act” to ensure stable funding for guarantees for small enterprises and small business owners.

Wonhee Kim, member of the National Assembly.

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The Regional Credit Guarantee Foundation is a policy-based financial institution that guarantees the debts of small business owners who lack sufficient collateral. Its funds are raised through contributions from the government, local governments, and financial institutions. However, there have been ongoing concerns that, despite a sharp surge in demand for guarantees due to the recent economic downturn, the funding structure is insufficient to meet these needs.

The current law limits the maximum contribution rate for financial companies to 0.3 percent, but the actual rate remains around 0.07 percent under the enforcement decree. In particular, starting in June this year, it is scheduled to be further reduced to 0.05 percent, raising concerns over a contraction in guarantee funds.

This rate is lower than those for the Korea Credit Guarantee Fund (0.225 percent) and the Korea Technology Finance Corporation (0.135 percent), leading to criticism that financial companies lack adequate accountability.

The proposed amendment seeks to address these issues by introducing a statutory minimum contribution rate of 0.2 percent for financial companies. The aim is to secure stable guarantee funds and enhance the sustainability of financial support for small business owners.

Assemblyman Kim stated, “The Regional Credit Guarantee Foundation is a key financial safety net supporting small business owners during times of crisis. As financial companies earn stable profits from these guarantees, they must take on a corresponding level of contribution responsibility.”

He further emphasized, “By making the contribution levels more realistic, this will serve as an opportunity to enhance the sustainability of financial policies for small business owners.”

Meanwhile, this legislative bill is expected to emerge as a key issue in discussions on systemic improvements aimed at revitalizing local economies and protecting small business owners.

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