Emergency Business Fund Loans for SMEs and Small Business Owners Affected by COVID-19... Applications Open from Next Month 1
Additional Funding Secured Reflecting High Demand from the Field
Up to 100 Million KRW per Company After Limit Review, Up to 20 Million KRW per Company Without Limit Review
[Asia Economy Reporter Lim Cheol-young] On the 31st, Seoul City announced that it will urgently provide additional support by accepting applications from the 1st of next month for the 300 billion KRW-scale 4-Mu (Four No's) Safe Finance program, which offers interest-free loans to help small business owners who have faced business difficulties due to the prolonged COVID-19 pandemic recover their daily lives.
The 4-Mu Safe Finance program is a support plan that introduces 'no interest' and 'no guarantee fees' by having Seoul City pay the loan interest and guarantee fees on behalf of borrowers, 'no collateral' through the Seoul Credit Guarantee Foundation's guarantee certificate, and 'no paper documents' for simplified loan applications. After investing 2 trillion KRW in June, Seoul City judged that there was urgent interest and demand on the ground and mobilized all available budgets to prepare an additional 300 billion KRW.
According to Seoul City, as a result of investing 2 trillion KRW in policy funds since June, loans amounting to 1.9569 trillion KRW (98%) have been supported. This is the result of continuous support for small business owners who have difficulty obtaining bank loans due to lack of collateral.
The 4-Mu Safe Finance program, which will resume loan supply in November, will provide support under the same conditions as those supplied since June. For those who have undergone limit screening, loans of up to 100 million KRW per business (credit score of 595 or higher, equivalent to the old grade 7 or above) are possible, and without limit screening, loans of up to 20 million KRW per business are available. The total loan period is five years. However, businesses restricted from loan support, including entertainment businesses, gambling, pleasure, and speculation, are excluded from the support target.
Among the support targets, low-credit individuals (credit score of 744 or below, equivalent to the old grade 6 or below) will have relaxed screening criteria to address the blind spots of financially marginalized groups. If issues such as bounced checks or credit judgment information have been resolved, the loan restriction screening criteria will be partially relaxed and immediately reflected in the screening without any grace period.
The support conditions include one year of interest-free loans from the loan execution date, with Seoul City subsidizing an interest rate of 0.8% from the second year onward. The loan principal is repaid in equal installments over four years after a one-year grace period. Han Young-hee, Director of Labor, Fairness, and Coexistence Policy at Seoul City, said, “Through the supply of the 4-Mu Safe Finance program prepared under limited financial conditions, we will do our utmost to support loans so that small business owners, the backbone of the local economy, can overcome the management crisis well until the economic recovery phase before COVID-19.”
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