Seoul City Injects '2 Trillion' Emergency Funds for Small Businesses... Full-Scale Supply of '4 No Worries Financial Support' Starts from the 9th

No Interest + No Guarantee Fee + No Collateral + No Paper Documents... Applications Start from the 9th
Up to 100 Million KRW Loan per Company After Limit Screening... 20 Million KRW per Company Without Limit Screening

[Asia Economy Reporter Lim Cheol-young] To support small business owners struggling due to the prolonged COVID-19 pandemic, the Seoul Metropolitan Government is launching an emergency fund injection worth 2 trillion won. The core of this initiative, called the '4-No (無) Safe Finance,' is to significantly reduce the burden on small business owners by providing funds quickly through a method that is 'interest-free,' 'guarantee fee-free,' 'collateral-free,' and 'paperless.'

On the 8th, Seoul announced that applications for the '4-No Safe Finance,' which provides interest-free funds to small business owners, will begin on the 9th. This support is the third measure following 800 billion won in January and 1 trillion won in February, and it is the first time that interest-free and guarantee fee-free support is being offered.

Due to the impact of COVID-19, last year's sales by industry decreased by up to 45% compared to the previous year. One in three small business owners (32.3%) is considering closing their business, indicating a serious situation. Eight out of ten small business owners (79.3%) expressed the need for interest-free loans to reduce financial burdens.

Seoul Mayor Oh Se-hoon's pledge, the '4-No Safe Finance,' is a support plan that introduces 'interest-free' and 'guarantee fee-free' by having the Seoul Metropolitan Government pay loan interest and guarantee fees on behalf of borrowers, 'collateral-free' through the Seoul Credit Guarantee Foundation's guarantee certificate, and 'paperless' for simplified loan applications.

The '4-No Safe Finance,' which provides 2 trillion won in support, allows loans of up to 20 million won per business without limit screening, and up to 100 million won per business with limit screening. Businesses that have used existing guarantees through the Credit Guarantee Foundation can also apply for overlapping loans within their credit limits, and the loan period is five years.

Businesses in restricted sectors such as entertainment, gambling, pleasure, and speculation are excluded from support. The first year is interest-free, and from the second year, 0.8% of the interest is compensated. According to Seoul, a business borrowing 100 million won through the 4-No Safe Finance is expected to save 7.12 million won in financial costs over five years.

To provide urgent relief to small business owners facing difficulties, Seoul will immediately inject 400 billion won starting on the 9th, and the remaining 1 trillion won will be supplied in July after the Seoul Metropolitan Council completes its supplementary budget review for additional funding. Eligibility requires a personal credit score of 595 or higher (formerly grade 7) for representatives of small and medium-sized enterprises and small business owners located in Seoul.

Additionally, exclusive funding support for low-credit borrowers in blind spots who have repeatedly failed to meet high loan thresholds due to unavoidable credit deterioration from sales decline will also start immediately. When assessing low-credit borrowers, if issues such as bounced checks or credit judgment information have been resolved, these will be reflected in the evaluation immediately without a grace period, partially relaxing loan restriction criteria.

The 'Special 4-No Safe Finance for Low-Credit Borrowers,' totaling 100 billion won, targets low-credit small business owners with credit scores between 350 and 744 (formerly grades 6 to 9), providing support up to 20 million won per business with partially relaxed screening criteria. This special loan fund includes 4.5 billion won contributed by five major commercial banks?Shinhan, Woori, Kookmin, NongHyup, and Hana?and is implemented through these banks.

Since April, the 'District 4-No Safe Finance,' operated by autonomous districts, has been conducted under the same conditions of interest-free, guarantee fee-free, collateral-free, and paperless. Small business owners who have already received loans can also benefit from the same conditions, with one year interest-free and a refund of the previously paid 0.5% guarantee fee. The loan scale is a total of 500 billion won, with support up to 20 million won per business. While applications cannot be made simultaneously for both the district and Seoul 4-No Safe Finance, additional applications are possible if there is remaining loan limit even after receiving district 4-No Safe Finance support.

Applications for the '4-No Safe Finance' can be made non-face-to-face without paper documents through the Seoul Credit Guarantee Foundation website's 'no-visit application' or the Hana Bank 'Hana OneQ Enterprise' mobile app. Seoul plans to develop systems to allow applications without paper documents and non-face-to-face processing through nine commercial banks and internet banks within the year, expanding step by step.

Meanwhile, to ensure stable and efficient operation of the '4-No Safe Finance,' the Seoul Metropolitan Government, the Association of District Mayors, five major commercial banks, and the Seoul Credit Guarantee Foundation will sign a 'Small Business 4-No Safe Finance Support Business Agreement' at the Seoul Credit Guarantee Foundation this morning.

The signing ceremony will be attended by Seoul Mayor Oh Se-hoon, Seoul Metropolitan Council Chairman Kim In-ho, Association of District Mayors Chairman Lee Dong-jin, Shinhan Bank President Jin Ok-dong, Woori Bank President Kwon Kwang-seok, KB Kookmin Bank President Heo In, NH NongHyup Bank President Kwon Joon-hak, Hana Bank President Park Sung-ho, and Seoul Credit Guarantee Foundation Chairman Han Jong-kwan.