Korea Federation of SMEs, KEPCO, and KCB Sign Service Partnership for Financial Support to Small Business Owners

Credit Ratings Expected to Improve for 2.18 Million Small Business Owners
"Reducing Interest Burden for Small Business Owners"

The Korea Federation of SMEs, Korea Electric Power Corporation (KEPCO), and Korea Credit Bureau (KCB) announced on July 9 that they held a signing ceremony at the Korea Federation of SMEs in Yeouido, Seoul, to develop an alternative credit evaluation model for financially vulnerable small business owners and to establish a service partnership for inclusive financial support for small business owners.

Previously, in August of last year, the three organizations signed an agreement to develop a credit evaluation system and policy indicators for financial support for small businesses and small business owners. Since then, they have combined and analyzed data related to small business owners held by each organization, successfully developed an alternative credit evaluation model, and have now reached this service partnership.

The Korea Federation of SMEs, Korea Electric Power Corporation, and Korea Credit Bureau held a signing ceremony on the 9th at the Korea Federation of SMEs in Yeouido, Seoul, to develop an alternative credit evaluation model for financially vulnerable small business owners and to establish a service partnership for inclusive financial support for small business owners. From left: Dongcheol Kim, President of KEPCO; Kim Kimoon, Chairman of the Korea Federation of SMEs; Jongseop Hwang, President of KCB. Korea Federation of SMEs

This new evaluation model differs from traditional models focused on financial assessments by combining various alternative credit information held by the Korea Federation of SMEs and KEPCO?such as the duration of Yellow Umbrella Mutual Aid membership, mutual aid fund contributions, electricity usage, and electricity bill payment information?with business credit information held by KCB to assess the credit soundness of small business owners. Compared to KCB's previous evaluation model dedicated to small business owners, this new model offers higher discrimination for mid- to low-credit individuals (grade 4 or below), making it possible to expect credit rating improvements for up to 36% (2.18 million people) of all small business owners.

Kim Kimoon, Chairman of the Korea Federation of SMEs, stated, "Last year, more than one million small business owners and self-employed people closed their businesses, reflecting the challenging situation. Small business owners need more loans and desperately need interest relief. This alternative credit evaluation model, utilizing data held by the three organizations, will help improve the credit ratings of struggling small business owners, reduce their interest burden, and provide new loan opportunities, making it a model that offers real support to small business owners."

The three organizations plan to go beyond this service partnership for inclusive financial support for small business owners and to pursue various collaborative projects, including joint data-based research, to develop comprehensive policies for SMEs and small business owners.