Hwaseong City to Provide Loan Interest Support for Small Business Owners Using Smile Microcredit

City to Subsidize 3.5% Out of 4.5% Interest Rate

Hwaseong City in Gyeonggi Province announced on January 14 that it will fully implement its interest support program for Smile Microcredit loans to low-credit small business owners this year, following a pilot run last year.

This program aims to ease the financial burden for low-credit small business owners in the city who have difficulty accessing institutional finance. When these business owners repay principal and interest on loans received from the Smile Microcredit Gyeonggi Hwaseong Corporation, the city will subsidize 3.5% out of the 4.5% interest rate.

With this support, the actual interest rate borne by the small business owner drops to 1%. In particular, for those who make repayments diligently for more than four months, the Smile Microcredit loan interest rate is reduced to 3.5%, effectively making the loan interest-free.

The city decided to expand the program after last year's pilot saw a 97% satisfaction rate among participants, indicating a highly positive response.

This initiative is especially noteworthy as it is a 'reverse interest welfare model,' where low-credit borrowers receive greater interest rate benefits than high-credit borrowers.

Eligible recipients include small business owners in the city who have received startup, operating, facility improvement, or emergency living expense loans from the Smile Microcredit Gyeonggi Hwaseong Corporation. This includes individuals in the bottom 20% of personal credit scores (KCB 700 points or below, NICE 749 points or below), recipients of basic living security, those in the near-poor class, and Earned Income Tax Credit beneficiaries.

Those wishing to apply can visit the Smile Microcredit Gyeonggi Hwaseong Corporation for consultation and submit their application. Applications are accepted year-round until the budget is exhausted.

Jung Myung-geun, Mayor of Hwaseong, stated, "This program will serve as much-needed relief for those excluded from institutional finance," adding, "We will build a robust support network to ensure there are no financial blind spots, providing a ladder of hope for small business owners to get back on their feet."

Meanwhile, the Smile Microcredit Gyeonggi Hwaseong Corporation is a non-profit organization designated by the Korea Inclusive Finance Agency to serve low-credit small business owners. Detailed eligibility requirements and loan amounts for each product can be found on the Korea Inclusive Finance Agency website (https://www.kinfa.or.kr/main.do).