Seoul City Provides 18 Billion KRW Loan Support to Social Economy Enterprises and Essential Workers... Up to 10 Million KRW per Worker

Provision of 18 Billion KRW Social Investment Fund, Focused Support for COVID-19 Affected Companies and Employment-Vulnerable Workers
Up to 600 Million KRW per Company for COVID-Affected Firms... Up to 6 Years, Annual Interest Rate 0.5~1.0%

[Asia Economy Reporter Lim Cheol-young] The Seoul Metropolitan Government will provide low-interest loans totaling 18 billion KRW from a social investment fund to social economy enterprises affected by COVID-19 restrictions such as gathering bans and social distancing, as well as to self-employed and freelance workers whose incomes have decreased, and essential workers in vulnerable infection environments such as care and transportation.

According to Seoul City on the 4th, the city will apply an annual interest rate of 0.5% to 1.0% depending on the level of damage, with a maximum loan amount per enterprise including refinancing funds ranging from 300 million to 600 million KRW, with a 2-year grace period and a 4-year repayment term. For workers struggling due to COVID-19, up to 10 million KRW per person will be supported at a low interest rate of 3% over three years. The city will invest 15 billion KRW in this fund.

The social investment fund was first established by Seoul City in 2012 and, as of the end of last year, operates with a total scale of 119.3 billion KRW, combining 82.2 billion KRW from the city fund and 37.1 billion KRW from private capital. The loan targets for this social investment fund include three main areas: ▲ social economy enterprises such as social enterprises, cooperatives, village enterprises, and self-sufficiency enterprises and social investment projects ▲ social housing projects ▲ self-employed, freelancers, and essential workers.

Enterprises that have previously received loans can also receive refinancing loans at lower interest rates. When repaying the outstanding loan balance, refinancing loans at low interest rates will reduce the interest burden on enterprises. The loan interest rates and repayment conditions are the same as those of the ‘COVID-19 Special Loan.’

Social economy enterprises supplying social housing to solve housing problems will also receive loans totaling 1.8 billion KRW. Enterprises can apply for up to 2.5 billion KRW per enterprise based on the cumulative outstanding social investment fund loan bonds, with a maximum loan period of 9 years. Social economy enterprises supplying social housing that have been affected by COVID-19 can also receive interest subsidy support under the COVID-19 special loan.

Emergency microloans totaling 3 billion KRW will also be provided to workers facing difficulties due to COVID-19. The loan targets are: ? self-employed, freelancers, platform workers ? essential workers ? employees of social economy enterprises and non-profit organizations. The loan method provides up to 10 million KRW per person at a low interest rate of 3% over three years.

Meanwhile, Seoul City is recruiting implementing agencies to operate the social investment fund this year until the 17th. Implementing agencies will be selected from institutions with similar social finance project experience and that have secured their own funds to match and use with the social investment fund.

The selected implementing agencies can apply for funds up to five times the amount they can operate independently, and must complete refinancing within one year of signing a credit transaction agreement with the city. Uncompleted loan funds must be returned to the city. The social investment fund will provide loans appropriately to social economy enterprises, social investment projects, vulnerable workers, social housing, etc., but the selection of target enterprises and projects and repayment management can be autonomously decided by each implementing agency.

Seo Seong-man, Director of Labor and Livelihood Policy at Seoul City, said, “Social economy enterprises, due to their nature of pursuing social value, must maintain the number of employees even when sales sharply decline, and most are small-scale businesses, so it is difficult to receive support from private finance despite difficulties caused by COVID-19,” adding, “We plan to consider additional support based on the scale of affected social economy enterprises and workers and their funding needs.”