'Gyeonggi Small Business COVID-19 Recovery Account'... Up to 20 Million Won Support

Guarantee Support for Over 10,000 Companies Including Medium-Low Credit, Low-Income, and Small-Scale Small Business Owners

File photo [Asia Economy DB]

[Asia Economy Reporter La Young-chul] Gyeonggi Province will continue to implement the 'Gyeonggi Small Business COVID-19 Overcome Account' support policy this year.

This project is a 'special negative loan guarantee' introduced by Gyeonggi Province as the first local government nationwide to support small business owners facing economic difficulties due to COVID-19.

The province recently decided to provide guarantee and loan support under the same conditions as last year, as the prolonged COVID-19 situation due to the spread of the Omicron variant and the Bank of Korea's base interest rate hike have deepened the worries of small business owners.

The support targets small business owners operating within the province (excluding corporations) whose representatives are either medium- to low-credit borrowers (formerly personal credit rating 4 or below), low-income earners (80% or below of median income for a four-person household), or socially vulnerable groups (retired or unemployed heads of households in their 40s and 50s).

Additionally, North Korean defectors, persons with disabilities, single-parent families, multicultural families, large families, basic livelihood security recipients, near-poverty class, high-interest financial users, and young re-entrepreneurs (under 39 years old) are also included.

However, those unable to engage in financial transactions or who received loan support from the same project last year are excluded.

The loan limit is up to 20 million KRW per business (differentiated by credit rating), and the loan period is initially one year. Borrowers can choose between a 3-month variable interest rate (base rate + 1.92%) and a 1-year fixed interest rate (base rate + 1.92%).

While existing Gyeonggi Credit Guarantee Foundation guarantees require an annual guarantee fee of around 1%, the province will fully cover the guarantee fee to aid COVID-19 crisis recovery.

In particular, to reduce psychological burden from repayment, the loan period can be extended up to four times on a yearly basis, allowing a maximum of five years with full exemption from guarantee fees.

The total support scale is 200 billion KRW, and the province expects at least 10,000 small businesses within the province to benefit from this support.

Loans can be obtained from 'NH Nonghyup Bank,' which has an agreement with the province, and applications can be made according to a 5-day rotation system based on the last digit of the applicant's birth year.

Kim Sang-su, head of the Regional Finance Division, said, "Many small business owners are facing threats to their livelihoods and the local economy has also been impacted, so it is time to focus all efforts on economic crisis recovery," adding, "We will strive to help the grassroots economy through bold and proactive measures."