Gwangju City Supports Insurance Compensation for Small and Medium Enterprises' Credit Transaction Losses

Accounts Receivable Insurance Premium 50% Support... Korea Credit Guarantee Fund Offers 10% Discount on Premiums

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] Gwangju Metropolitan City announced on the 13th that it will support the insurance premiums for 'Accounts Receivable Insurance' so that small and medium-sized enterprises (SMEs) can prepare for financial difficulties and the risk of chain bankruptcies caused by credit transactions.

Accounts Receivable Insurance is a public insurance system that allows SMEs to receive insurance payments of up to 80% from the Korea Credit Guarantee Fund when they fail to collect payments due to the buyer's default after selling goods or services on credit to their clients.

As a COVID-19 measure, Gwangju secured 400 million won in the second supplementary budget this year and signed a 'Gwangju Metropolitan City Accounts Receivable Insurance Premium Support Business Agreement' with the Korea Credit Guarantee Fund on the 26th of last month.

According to the agreement, Gwangju supports 50% of the insurance premium (up to a maximum of 3 million won) for companies subscribed to accounts receivable insurance, and the Korea Credit Guarantee Fund offers a 10% preferential discount on the insurance premium.

The support target companies are SMEs whose headquarters or main business sites are located in Gwangju, excluding industries such as liquor, tobacco, precious metals retail and wholesale, lodging and restaurants, finance and insurance, golf course operations, and other industries excluded from insurance contracts.

Park Nam-eon, Director of the City’s Job and Economy Office, said, “By supporting insurance premiums, we expect to prevent chain bankruptcies of SMEs and promote management stability, which will enhance employment effects and corporate growth potential. We will closely cooperate with financial institutions, related associations, and organizations to implement various support policies for SMEs so that they can overcome the difficult times caused by COVID-19.”