Seoul City to Provide 1.6 Trillion Won in Policy Funds for Small Business Owners

Interest Rates at 2~3% Per Annum

[Asia Economy Reporter Kiho Sung] The Seoul Metropolitan Government announced on the 18th that it will provide financial support worth 1.6 trillion won to help alleviate the difficulties faced by small business owners who are directly hit by the contraction of consumer sentiment due to the 3 highs (high inflation, high exchange rates, and high interest rates). Applications for funding start tomorrow.

The funds supplied this time consist of 700 billion won of ‘Safe Interest Rate Funds’ offered at a fixed interest rate of 3.7% for five years, reflecting the high interest rate situation, and 900 billion won of ‘Small and Medium Enterprise Development Funds’ including facility funds and emergency self-employed funds, totaling 1.6 trillion won.

First, to reduce the burden on small business owners experiencing management crises amid volatile high interest rates, the ‘Safe Interest Rate Funds’ will be supplied for the first time in the amount of 700 billion won. Up to 100 million won per business will be loaned at an average fixed interest rate of 3.7%, allowing small business owners to focus on management activities with peace of mind. The loan repayment is structured as a one-year grace period followed by four years of equal installments.

The interest rate is flexibly supported between 2.75% and 1.75% depending on the CD rate range. A fixed interest rate of 3.7% is uniformly applied in the CD rate range of 3.75% to 4.75%. If the CD rate is 3.5%, the market interest rate of 1.75% is compensated to reduce the actual burden interest rate for small business owners to 3.45%, and if the CD rate is 5.0%, the market interest rate of 2.75% is compensated to lower the actual burden interest rate to 3.95%.

The ‘Safe Interest Rate Funds’ are available to any small and medium enterprises and small business owners located in Seoul, excluding restricted industries such as entertainment, gambling, leisure, and speculation.

The city expects that the actual burden interest rate for small business owners will be more than 1% lower than the market interest rate through this ‘Safe Interest Rate Funds’ supply, with an estimated interest saving effect of about 2.17 million won per business for a 33 million won loan.

In addition, 900 billion won of ‘Small and Medium Enterprise Development Funds’ will be supplied to provide timely financial support to small business owners in need. The maximum amount per business varies by fund but can be up to 500 million won.

First, 200 billion won of fixed interest rate funds have been allocated at interest rates ranging from 2.0% to 4.1% for ▲Growth Base Funds ▲Emergency Self-Employment Funds ▲Facility Funds.

Variable interest rate funds totaling 700 billion won have been allocated for ▲Economic Revitalization Funds ▲Inclusive Finance Funds ▲Startup Company Funds, with the city compensating interest rates of 1.8% or 2.5%, resulting in an average expected actual burden interest rate of 3.8% for small business owners using these funds.

Applications can be submitted through the Seoul Credit Guarantee Foundation website’s ‘Non-Visit Application’ or via mobile apps such as Shinhan Bank’s ‘Shinhan SOL Biz’, Hana Bank’s ‘Hana One Q Enterprise’, Kookmin Bank’s ‘KB Star Enterprise Banking’, and Woori Bank’s ‘Woori WON Banking Enterprise’.

Small business owners who find non-face-to-face applications difficult can make a visit reservation through the Seoul Credit Guarantee Foundation website or customer center and visit the branch on the reserved date. Branch locations can be confirmed via the Seoul Credit Guarantee Foundation website or by phone.

Jae-yong Park, Director of Labor, Fairness, and Win-Win Policy at Seoul City, said, “We plan to concentrate policy funds totaling 1.6 trillion won, including the Safe Interest Rate Funds, to help small business owners recover their daily lives amid the economic downturn. We will pursue various support measures to help small business owners quickly overcome management crises and normalize their operations.”