Gyeonggi-do to Support Social Economy Enterprises with 100 Billion KRW over 5 Years at Annual Interest Rate of Around 1%

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province will provide low-interest loans at an annual rate of around 1% totaling 100 billion KRW over five years to social economy enterprises within the province.

Gyeonggi Province recently signed a "Gyeonggi Province Social Value Venture Fund Operation Business Agreement" with the Central Credit Union Federation and 33 local credit unions in the province, announcing on the 6th that it will carry out a support project worth 100 billion KRW by 2025.

This project is an expansion and development of the "Social Value Venture Fund with Mutual Finance," a pledge made during the 7th local government administration.

From October 2019 to June of this year, the province lent social economy funds to credit unions, providing financial support worth 15.4 billion KRW to social economy enterprises.

However, due to difficulties in securing funds annually, from this month onward, the operation method has changed to lending using credit unions' funds as the source, with the province subsidizing part of the loan interest.

Accordingly, it will be possible to stably supply about 20 billion KRW annually to social economy enterprises in the province for five years. The number of credit unions participating in loan execution has also increased from 20 to 33.

The loans have variable interest rates of 3.3% per annum for unsecured loans and 2.9% per annum for secured loans. The province will subsidize interest up to 2.0 percentage points for four years based on social value evaluation. In this case, the actual burden interest rate for enterprises is around 1% per annum. Additionally, the loan limit and period have been increased from the previous "up to 300 million KRW and 10 years" to "up to 500 million KRW and 15 years," reducing the burden on enterprises.

A provincial official explained, "Most social economy enterprises are small-scale and have faced difficulties in raising funds from financial institutions, especially due to the prolonged COVID-19 pandemic, which has caused many operational challenges. This project is expected to create a healthy virtuous cycle ecosystem and strengthen the competitiveness of social economy enterprises by providing low-interest funds to the financially vulnerable social economy sector."