[Asia Economy Honam Reporting Headquarters Reporter Lee Gwan-woo] On the 25th, Kim Sam-ho, Mayor of Gwangsan District, presented a case study on overcoming the COVID-19 crisis under the theme of “Grassroots Finance for Small Business Owners, Unsecured 1% Hope Loan (hereinafter 1% Hope Loan)” at the discussion held at Jeongdong 1928 Art Center in Seoul titled “Welcoming the Spring of the Economy after One Year of COVID-19.”
The discussion was jointly hosted by the National Association of City, County, and District Mayors and Members of the National Assembly Lee Kwang-jae and Kim Young-bae.
The unsecured 1% Hope Loan announced by Mayor Kim is a project promoted together with five local financial institutions through the Gwangsan Economic Vaccine Council, a public-private-academic governance body in Gwangsan District responding to the COVID-19 economic crisis.
Small business owners with low credit ratings who take out unsecured loans from these financial institutions receive compensation of 3.5% interest out of the 4.5% interest from the Gwangsan Economic Vaccine Council fund, leaving only 1% interest to be borne by the small business owners.
In the first phase from June to August last year, 165 small business owners used this system to secure liquidity, and in the second and third phases from October to December, 163 small business owners benefited from it.
It was especially praised for providing significant help to self-employed individuals and unregistered business operators who had been using high-interest card loans due to management difficulties, as well as small business owners in the financial blind spots who could not access loans from formal financial institutions.
In his presentation at the discussion, Mayor Kim proposed that financial support projects for small business owners tailored to each city, county, and district should be implemented together with local mutual financial institutions, reflecting on the experience of Gwangsan District.
He emphasized, “Through the process of overcoming the COVID-19 economic crisis with the 1% Hope Loan, we discovered the solidarity of local mutual financial institutions and the possibility of loans friendly to ordinary citizens. We also confirmed that local mutual financial institutions can respond more quickly than major banks, which are the primary financial sector, in urgent support for small business owners.”
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