Gwangju Gwangsan Economic Vaccine Meeting, Nationwide First '1% Interest Loan' Funded by Residents' Donations

[Asia Economy Honam Reporting Headquarters, Reporter Yoon Jamin] The Gwangsan Economic Vaccine Council of Gwangsan-gu, Gwangju Metropolitan City (representative Ha Sang-yong) recently held a signing ceremony with five financial institutions in Gwangsan-gu (Gwangju Eoryong, Usan, Bia Credit Union, Seogwangju, Hanmaeum Saemaeul Geumgo) and announced on the 5th that they will launch a product called ‘1% Hope Loan’ that allows ordinary citizens to borrow at an interest rate of 1%.

The ‘1% Hope Loan’ product allows loans up to 3 million KRW with a one-year maturity, and there is no early repayment fee if repaid early.

The interest rate is 4.5%, of which 3.5% is supported by the Gwangsan Economic Vaccine Council, and the individual burden is 1%.

The application period is from the 8th to August 31st, and it may be suspended if funds run out early.

The support targets are mainly those in legal blind spots who cannot receive loans due to loan regulations, card loan borrowers, unregistered business operators, and low-income, low-credit individuals whose annual sales are under 100 million KRW and whose sales have decreased by more than 20% before and after COVID-19.

The Gwangsan Economic Vaccine Council supports 3.5% interest for one year on loans up to 100 million KRW per bank, and the support is provided through the Together Gwangsan Sharing Culture Foundation.

When the Gwangsan Economic Vaccine Council held its launch ceremony on April 7th, it promoted the first phase of economic vaccine funding, and part of the funds voluntarily donated by residents is used to support interest.

The five banks handling the loan products (Gwangju Eoryong, Usan, Bia Credit Union, Seogwangju, Hanmaeum Saemaeul Geumgo) agreed to cooperate through sharing pain with residents and addressing government economic support blind spots. Despite the risk of principal recovery, they handle the products as social contribution activities in partnership with the Together Gwangsan Sharing Foundation, and loan decisions are made through consultations by the financial institutions.

In particular, Eoryong Credit Union, which has experience in achieving results such as recovering over 90% of the principal by providing small loans under 3 million KRW to citizens through the ‘No-document Loan Project’ from 2015 to 2017, is known to have made special efforts by proposing this product launch to the Gwangsan Economic Vaccine Council.

The Gwangsan Economic Vaccine Council, composed of representatives from various sectors of the local community, was established to overcome the economic crisis caused by COVID-19 through cooperation and solidarity, with the Gwangsan-gu Corporate Doctor Center (Director Kim Young-jip) serving as the practical secretariat responsible for overall operations.

Gwangsan-gu’s local economy has been directly hit by COVID-19, with 93% of self-employed people experiencing a decline in sales before and after the pandemic. This project is expected to play an oasis-like role by supporting small business owners in legal blind spots who cannot be supported legally by the government, as well as ordinary citizens who find it difficult to borrow money due to high credit card debt and lack of business premises, making loan applications impossible.