The National Credit Union Federation of Korea said it signed a business agreement with the Korea Federation of Credit Guarantee Foudations (KOREG) on "support to ease the repayment burden on small businesses and self-employed through switching to a loan structure with maturity repayment" and will implement it starting on the 17th.
A conversion guarantee is a guarantee that switches an existing loan backed by a regional credit guarantee foundation to a new guaranteed loan by issuing a new guarantee certificate, which can reduce the repayment burden by adding a grace period and extending the repayment period for the existing loan.
It provides a full waiver of prepayment penalties incurred in repaying existing guaranteed loans and a guarantee fee reduction (0.2%) for low-credit borrowers (CB 744 points or lower).
Credit unions are introducing the conversion guarantee system for the first time among inclusive finance institutions, taking the lead in reducing the financial burden on local small business owners and supporting a stable management environment.
With this agreement, applications for conversion guarantees are available at more than 110 credit unions nationwide, and local small business owners can visit a nearby credit union branch to easily receive consultation and apply.
Cho Yong-rok, head of the Financial Support Division at the National Credit Union Federation of Korea, said, "Through the conversion guarantee business agreement, credit unions will strengthen their social role as inclusive finance institutions and provide practical support to small business owners, the key players in the regional economy."