Korea Federation of SMEs Introduces Simple Authentication for Remote SME Mutual Aid Fund Loans

Remote Loan Applications and Membership Now Available for SME Mutual Aid Fund

The Korea Federation of SMEs announced on June 17 that it has improved its system by introducing simple authentication, allowing small and medium-sized enterprises (SMEs) and small business owners to easily join and receive loans from the SME Mutual Aid Fund remotely.

The SME Mutual Aid Fund is a mutual aid system that allows SMEs to use funds, which are sourced from contributions paid by SMEs and government subsidies, as credit for various purposes such as loans for dishonored accounts receivable, promissory note and check loans, and working capital loans. Currently, more than 17,000 SMEs and small business owners are enrolled in the fund, and last year, it supported loans totaling 690 billion won.

Previously, when joining the mutual aid fund or applying for loans remotely, the only means of identity verification was a corporate digital certificate, which required business owners to visit a bank in person to obtain the certificate, causing inconvenience. In response, the mutual aid fund has introduced simple authentication systems provided by Naver, Toss, and Kakao, allowing SMEs and small business owners to authenticate themselves directly and conveniently use the fund’s membership and loan services.

Meanwhile, the mutual aid fund allows members to utilize credit loans at an average interest rate of 6%, up to three times the balance of their paid-in contributions, depending on their credit rating. If the credit limit is insufficient, members can receive real estate-backed loans (including subordinate liens) at an interest rate of 4.5%, up to ten times the balance of their paid-in contributions. In addition, local governments provide interest subsidies of up to 3%, further reducing the interest burden.

Lee Changho, head of the Mutual Aid Business Division at the Korea Federation of SMEs, stated, "We will actively improve the system to provide substantial financial support to SMEs and small business owners who are struggling due to prolonged sluggish domestic demand and worsening external conditions."