Supplementary Budget Offers Lifeline to Builders... MOLIT to Provide 1 Trillion Won in Rapid Support via PF and Safe Buyback Programs

Supplementary Budget Accelerates Liquidity Support for Housing Industry under New Administration
8 Billion Won in Just Two Months... Strong Response from Construction Firms in Need

The government’s special guarantee and buyback programs, launched in September to support struggling small and medium-sized construction companies, have seen a surge in applications from the industry. To date, applications totaling over 800 billion won have been received, and liquidity support exceeding 1 trillion won is expected to be provided by the end of the year.

On November 12, the Ministry of Land, Infrastructure and Transport announced, “The special project financing (PF) guarantee for small and medium-sized construction firms and the unsold housing buyback program, introduced through the second supplementary budget in July and the ‘Regional Construction Investment Enhancement Plan’ in August, have been receiving a strong response from the industry.”

PF Special Guarantee: Support Provided if Project Feasibility Is Strong, Even for Lower-Ranked Firms

The PF special guarantee is a program that opens up funding channels even for small and medium-sized construction companies with relatively weaker construction capabilities. Compared to existing guarantees, the weighting of the contractor evaluation has been reduced (from 35 points to 30 points), while project feasibility assessment has been strengthened (from 65 points to 70 points), making it easier for construction companies ranked outside the top 100 to receive guarantees. The range of eligible financial institutions has also been expanded from banks to include securities firms, insurance companies, mutual finance companies, and savings banks, and the review process and guarantee fee rates have been adjusted to favor smaller firms.

Thanks to this program, a small construction company in North Jeolla Province, previously unable to secure a PF loan guarantee due to its low construction ranking, was able to obtain a loan of 140 billion won. Another construction firm in Busan, recognized for its project feasibility, reduced its guarantee fees by 14 percent.

According to the ministry, within just two months of implementation, five projects have received approval for PF special guarantees totaling 675 billion won, with two additional projects under review. Approximately 800 billion won is expected to be disbursed by the end of this year. The government aims to provide a total of 2 trillion won in support by 2027.

Safe Buyback: Supplying Funds at Low Interest Rates of 3-4%... Transition to Rolling Applications and Eased Requirements

The unsold housing safe buyback program is designed for regional projects facing financial difficulties due to sluggish sales, supplying funds at low interest rates of around 3-4% to prevent construction stoppages.

For example, a project in Busan had achieved over 90% construction progress but suffered from low sales rates, resulting in a lack of funds to complete the work. Through this program, the company was able to secure the remaining construction costs. Similarly, a project in South Jeolla Province faced difficulties paying subcontractors due to increased construction costs, but the safe buyback program enabled the company to resolve its outstanding construction payments.

Since the first round of applications in September, a total of 164.4 billion won has been submitted, and the ministry plans to complete the review process and provide funding within this year. From the second round of applications, which began on November 4, the application period has been changed to a rolling basis, and requirements have been eased to allow even projects with less than the required construction progress to apply conditionally. Construction companies ranked within the top 30 are now also prioritized for support.

Kim Heonjeong, Director of Housing Policy at the Ministry of Land, Infrastructure and Transport, stated, “Through the PF special guarantee and safe buyback programs, more than 1 trillion won in liquidity will be supplied by the end of this year. Going forward, we will continue to gather feedback from the housing industry throughout the implementation process and actively support conditions for housing supply.”