Gwangju City Supports 'SME Accounts Receivable Insurance' to Prevent Consecutive Bankruptcies

Up to 70% Support Including 50% from the City and 20% from Shinhan Bank

Gwangju City Hall exterior view.

Gwangju City announced on the 18th that it will promote the "2025 Accounts Receivable Insurance Premium Support Project" to enhance the management stability of local small and medium-sized enterprises (SMEs) and prevent a chain of bankruptcies.

"Accounts Receivable Insurance" is a system in which the Korea Credit Guarantee Fund compensates part of the loss if a company sells goods or services on credit to a client and is unable to collect the payment. It serves as an essential safety net that helps companies continue stable operations by protecting them from unexpected financial losses caused by client bankruptcies or defaults, playing a crucial role in reducing management risks for SMEs.

In fact, during the corporate rehabilitation (court receivership) applications of Daewoo Winia Group and Korea Construction, accounts receivable insurance served as a practical shield for local SME partners, helping to minimize damages.

The city has signed an agreement with the Korea Credit Guarantee Fund and will allocate a budget of 300 million KRW to support 50% of the accounts receivable insurance premiums. Each company can receive up to 3 million KRW per year. Eligible applicants are SMEs headquartered in Gwangju City in industries such as manufacturing, wholesale, and services that are subject to accounts receivable insurance contracts.

After receiving a 10% discount on the insurance premium through the Korea Credit Guarantee Fund, Gwangju City will provide additional support for 50% of the remaining premium. In addition, companies can receive an extra 20% support from Shinhan Bank, so the actual insurance premium burden for companies will be about 30% of the total.

Applications are accepted in person at the Gwangju Credit Insurance Center of the Korea Credit Guarantee Fund, on a first-come, first-served basis until the budget is exhausted. For more details, contact the Gwangju Credit Insurance Center of the Korea Credit Guarantee Fund or the Business Support Team of the Gwangju City Startup Promotion Division.

Joo Jaehui, Director of the Economic and Startup Bureau, said, "Through this project, we hope that local SMEs can reduce management risks caused by uncollected payments from clients and operate their businesses in a more stable environment," adding, "We will continue to prepare various support measures to enhance the competitiveness of companies and reduce management risks."