Province to Support Small Business Owners with Medium to Low Credit Starting from 30th... Total 300 Billion KRW Scale
Up to 100 Million KRW per Company, Total 3% Financial Cost Support Including 2% Interest Subsidy
Gyeonggi Province announced on the 1st that it has launched a special debt repayment extension guarantee worth 300 billion KRW for small business owners with low to medium credit ratings to support the smooth transition of loans and reduce the burden of debt repayment.
This special guarantee is part of the livelihood recovery project, aiming to extend the principal repayment period for small business owners whose repayment is due after the COVID-19 special support, and to reduce financial burdens through interest subsidy. It is the largest scale of refinancing guarantee support in Gyeonggi Province's history.
The beneficiaries of the special guarantee are small business owners with low to medium credit scores of 839 points or below (formerly grade 4) who are currently using the Gyeonggi Credit Guarantee Foundation guarantee certificate. Support is provided up to 100 million KRW per business, with a three-year grace period for principal repayment, followed by a loan conversion method where the principal is repaid monthly over the next three years (3 years grace, 3 years installment repayment).
Typically, refinancing loans incur early repayment fees at banks, and additional guarantee fees of over 1% per year must be paid due to the extension of the guarantee period. However, in this special guarantee case, Gyeonggi Credit Guarantee Foundation has signed a business agreement for ‘Special Financial Support for Small Business Debt Repayment Extension’ with KB Kookmin Bank, IBK Industrial Bank, NH Nonghyup Bank, Shinhan Bank, Woori Bank, SC First Bank, and Hana Bank. If the loan bank is not changed, early repayment fees are waived, and Gyeonggi Province supports a 1% guarantee fee and 2% loan interest rate, significantly reducing the financial burden on small business owners.
For example, if a small business owner is using a 50 million KRW loan secured by a Gyeonggi Credit Guarantee Foundation guarantee certificate, converting to this special guarantee is expected to provide an annual benefit of about 1.5 million KRW for approximately six years, corresponding to a total of 3% (2% interest and 1% guarantee fee) on the 50 million KRW.
However, businesses currently in a default state with Gyeonggi Credit Guarantee Foundation, those who have applied for the New Start Fund, companies that are closed or suspended, or those that have relocated their business sites outside Gyeonggi Province are excluded from support.
Kim Kwang-deok, Director of Regional Finance at Gyeonggi Province, said, “During the COVID-19 pandemic, loans for self-employed individuals increased significantly, and the burden of principal repayment due dates has become a major challenge for small business owners. We have prepared provincial-level measures for a smooth transition,” adding, “We hope this special guarantee will help small business owners overcome difficulties.”
To apply for the special guarantee, visit one of the 26 branches or 4 offices of the Gyeonggi Credit Guarantee Foundation, or download and install the guarantee application app ‘Easy One’ from Google Play or the Apple App Store, then select ‘Refinancing Guarantee Application’ to apply. For inquiries, contact the Gyeonggi Credit Guarantee Foundation Customer Center.
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