Starting from the 27th, '1 Million Won Livelihood Loan' for Vulnerable Groups Begins

'Loan of 1 million KRW for living expenses' for those with 'credit score below 700 and annual income under 35 million KRW'
If you first borrow 500,000 KRW, monthly interest is 6,416 KRW
Interest-only payments allow maturity extension up to 5 years
In-person application at the Saemin Financial Integrated Support Center

As the advance reservation for emergency living expenses begins and applicants surge, a notice with the phrase "small amount living expense loan" is placed at the entrance of the Jungang Community Financial Support Center in Jung-gu, Seoul on the 23rd. Photo by Jinhyung Kang aymsdream@

Starting from the 27th, '1 million won livelihood loans' will be offered at 46 Community Finance Integrated Support Centers nationwide. This small-scale livelihood loan of up to 1 million won is available to individuals with credit scores in the bottom 20% or lower (KCB 700 points, NICE 744 points) and an annual income of 35 million won or less. Loans will be granted only to those who make a prior reservation on the designated day.

According to the Financial Services Commission, the small livelihood loan initially provides 500,000 won, and if the interest is paid faithfully for more than six months, additional loans can be obtained. If the purpose of funds such as hospital bills can be verified, borrowers can receive up to 1 million won even at the initial loan. The key point of the small livelihood loan is to provide immediate same-day loans to people who find it difficult to receive support not only from formal financial institutions but also from existing policy-based community finance, thus preventing exposure to illegal private loans.

The Financial Services Commission explained, "The so-called 'durable goods loan' (a loan to rescue oneself) is usually around 500,000 won, and considering that the most common loan amount advertised on online lending sites is 400,000 won, the scale was set accordingly." The average interest rate estimated by the Korea Financial Investment Association is 414%, and this community finance system aims to prevent people from turning to loan sharks due to lack of 500,000 won.

The small livelihood loan can be accessed by visiting the Community Finance Integrated Support Centers in person. After counseling on the borrower's situation, including expenditure purpose and repayment willingness, the loan is executed on the same day. Loans can be repaid at any time without prepayment penalties. If interest payments are made consistently, the borrower can apply to extend the maturity up to five years.

The supply scale for this year is 100 billion won, and the interest payment for an initial 500,000 won loan is about 6,416 won per month. If interest is paid without fail for six months, the monthly interest burden will be reduced to 5,166 won, and after an additional six months, it will be further lowered to 3,916 won as an incentive. The budget for this program was created with donations of 50 billion won each from banks and the Korea Asset Management Corporation.

As the advance reservation for emergency living expenses began and applicants surged, a citizen visiting the Jungang Seomin Financial Integrated Support Center in Jung-gu, Seoul, on the 23rd is receiving consultation. Photo by Jinhyung Kang aymsdream@

Anyone who meets the credit and income requirements, including those who are delinquent or have no income, can receive support. However, loans may be denied to those registered with the Korea Credit Information Services for delinquency in national or local taxes, loan or insurance fraud, or other financial disorder information. If a delinquent borrower applies for a small livelihood loan, loan support will be provided on the condition that debt adjustment is underway.

The Financial Services Commission stated, "During loan counseling, depending on the applicant's situation, we plan to strengthen counseling linkage with various self-support programs such as debt adjustment, welfare, and employment support that applicants may not have been aware of and thus have not received support."

Accordingly, counseling will also cover debt adjustment, welfare systems, and startup support. For debt adjustment, one-stop comprehensive debt adjustment counseling applications are supported through credit recovery committee counselors working together within the Community Finance Integrated Support Centers. Welfare programs are linked through the social security information system connected to over 3,500 administrative welfare centers nationwide, and in 11 centers, local government welfare officers will provide direct one-stop counseling. Startup support includes guidance on more than 160 employment support programs, followed by consultations with professional career counselors who provide job placement and interview coaching, along with operation of employment success allowance support.

Meanwhile, victims of illegal private loans can use the 'Debtor Representative Free Support Project.' Lawyers affiliated with the Korea Legal Aid Corporation respond to collection activities by illegal private loan operators on behalf of low-income individuals exposed to illegal debt collection risks.

The Financial Services Commission emphasized the need for special caution as cases of text messages impersonating policy community finance or voice phishing scams have been increasing recently. A Financial Services Commission official said, "There are cases where the logo of the Korea Inclusive Finance Agency is forged or policy community finance products like 햇살론 (Haetsal Loan) are impersonated to approach people and induce high-interest loans through phone consultations," adding, "The Korea Inclusive Finance Agency does not advertise loan products via text messages or phone calls at all."