'Small Business Financial Loans Made Easier'... Gyeonggi-do Supports 'Guarantees'

Credit Grade 6 to 4 · Full Guarantee Fee Exemption for up to 5 Years
For Small Business Owners Restricted from Using Primary Financial Institutions

[Asia Economy Reporter Ra Young-cheol] Gyeonggi Province has taken steps to lower the financial loan barriers to help small business owners in the province who are struggling due to COVID-19 secure cash flow and liquidity.

According to the province on the 14th, the support scale for this year's 'Gyeonggi Small Business COVID-19 Overcome Account' has been increased from the original 200 billion KRW to a total of 400 billion KRW, enabling about 40,000 businesses to receive support benefits.

The support targets are small business owners (excluding corporations) in the province whose representatives have an annual income of 47 million KRW or less, or low-income earners corresponding to 80% of the median income (for a four-person household) as of 2021, retired or unemployed heads of households in their 40s and 50s, and young re-entrepreneurs (under 39 years old).

Additionally, users of high-interest financial services, low-credit individuals (personal credit score of 839 or below), North Korean defectors, multicultural families, large families, single-parent families, persons with disabilities, basic livelihood security recipients, and near-poverty class are also included. However, those who are unable to engage in financial transactions are excluded.

The loan limit is 10 million KRW, and support is provided at a low interest rate in the 2% range (as of December 2020, 3-month variable interest rate at 2.58% per annum, 1-year fixed interest rate at 2.76% per annum). The guarantee fee is fully covered by Gyeonggi Province.

The loan period is initially one year, and to reduce repayment burdens, the loan period can be extended up to four times in one-year increments, allowing a maximum of five years with the guarantee fee fully waived.

The application requirements have also been relaxed by raising the credit score threshold for low-credit individuals from 744 points (credit grade 6) or below to 839 points (grade 4) or below, focusing on micro small business owners who account for 45% of small business owners in the province.

This expansion measure will be applied starting from the 21st, and applications can be made at NH Nonghyup Bank branches within the province.

To prevent application congestion in line with the expansion, the province will introduce a five-day rotation system based on the last digit of the applicant's birthdate for accepting applications.