On the afternoon of the 15th, Lee Yong-seop, Mayor of Gwangju Metropolitan City, announced the special loan support policy for small business owners and self-employed individuals affected by COVID-19, offering unsecured, interest-free, and guarantee fee-free loans, at the briefing room on the 5th floor of the city hall. From the left in the photo are Kim Dong-chan, Chairman of the Gwangju Metropolitan Council, Lee Yong-seop, Mayor of Gwangju Metropolitan City, a sign language interpreter, and Byun Jeong-seop, Chairman of the Gwangju Credit Guarantee Foundation. Photo by Gwangju Metropolitan City
[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] On the afternoon of the 15th, Lee Yong-seop, Mayor of Gwangju Metropolitan City, announced an emergency management fund support policy for small business owners and self-employed individuals affected by COVID-19 at the city hall briefing room.
Chairman Kim Dong-chan of the Gwangju Metropolitan Council and Chairman Byun Jeong-seop of the Gwangju Credit Guarantee Foundation also attended the announcement.
Mayor Lee stated, “Due to the spread of COVID-19, citizens' consumption sentiment and external activities have been greatly reduced, causing the livelihood economy to collapse and small business owners and self-employed individuals to suffer unprecedented hardships due to financial shortages. Therefore, we have devised a special measure that allows small enterprises, including small business owners and self-employed individuals with insufficient collateral capacity, to receive loans with 3 no’s (no collateral, no interest, no guarantee fee) benefits to resolve their management difficulties.”
The eligibility for applying for the ‘COVID-19 Affected Small Business Special Guarantee’ is sufficient if the small enterprise is located in the Gwangju area and has been affected by COVID-19. The loan amount is determined within a maximum limit of 70 million KRW based on the company’s credit rating, sales, and other factors.
The loan conditions allow borrowing without collateral as the Gwangju Credit Guarantee Foundation provides the guarantee, and repayment can be made in installments over five years.
Gwangju City will cover the loan interest of 1.5% for one year (however, if the small business owner does not obtain a small business policy fund confirmation issued by the Small Enterprise and Market Service, the rate is 2.9%) and a guarantee fee of 0.8%, so small business owners and self-employed individuals bear no interest or guarantee fee burden. After one year, the interest is borne by the borrower.
This benefit is retroactively applied even to those who have already received special guarantees according to the Ministry of SMEs and Startups’ ‘COVID-19 Affected Small Business Support Special Guarantee Payment Standards.’
Gwangju Metropolitan City is the first in the nation among local governments to fully support special guarantee fees and loan interest for COVID-19 affected companies, which is expected to greatly help small merchants who need operating funds such as rent, wages, and utility bills.
With this special guarantee support policy, small business owners who borrow the maximum loan amount of 70 million KRW will effectively receive a cash benefit of up to 2.59 million KRW per person.
The special guarantee fund will primarily utilize the Ministry of SMEs and Startups’ ‘COVID-19 Affected Small Business Support Special Guarantee’ resources, and when depleted, Gwangju City will additionally prepare special guarantee funds under the same conditions.
Small enterprises such as small business owners and self-employed individuals wishing to receive interest-free and guarantee fee-free special funds can consult through the Gwangju Credit Guarantee Foundation website or counseling center, and apply at all branches of Gwangju Bank, Hana Bank, and Shinhan Bank, which have signed business consignment agreements with the Gwangju Credit Guarantee Foundation. Applications will be expanded to all branches of KEB Hana Bank, NongHyup Bank, Kookmin Bank, and Woori Bank by the 20th.
Mayor Lee Yong-seop said, “While meticulously responding to the spread of COVID-19 through flawless quarantine activities, we will actively implement support policies with the central government to revive the local economy, which is in a critical state. This time, we have first announced support policies for small enterprises facing the greatest difficulties, and secondly, we will announce support measures for unemployed and irregular workers who are struggling due to job loss or lack of work caused by COVID-19.”
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