The repayment period for small business owners who have suffered losses due to COVID-19 will be extended by up to 15 years. Interest rates will also be lowered to reduce repayment burdens.
According to the Ministry of Small and Medium Enterprises and Startups, this special guarantee allows small business owners who have closed their businesses to convert existing loans backed by local credit guarantee foundations into loans with a maximum repayment period of 15 years.
The support target includes individuals who have operated a business from April 1, 2020, to the end of June this year, and who are now in a closed state of business sites, but are faithfully repaying and utilizing loans backed by local credit guarantee foundations.
Previously, guarantees for closed small business owners operated by local credit guarantee foundations could be extended for partitioning repayment periods, but only up to a maximum of 7 years. However, with the introduction of this special guarantee, the repayment period has significantly increased to a maximum of 15 years.
For selected beneficiaries, existing local credit guarantee loans will be converted into new guaranteed loans with conditions of a 2-year grace period and 13 years of partitioning repayment. An interest rate of financial bonds for 5 years + 0.1 percentage points will apply for guaranteed amounts of less than 100 million won. As of the 1st of this month, this is approximately 2.95%.
To reduce the guarantee fee burden for small business owners due to long-term partitioning repayment, customer-paid guarantee fees will also be fully supported by government funds.
To expedite the guarantee business, starting from the 5th, it will first be implemented for small business owners using loans from Kookmin Bank, NongHyup, and Shinhan Bank through local credit guarantees. Discussions with other banks are underway to gradually expand the target banks between September and October.
This special support can be applied for starting from the 5th at the local credit guarantee foundation branch where the business site is located. More details can be received through the Korea Federation of Credit Guarantee Foundations and 17 local credit guarantee foundations.
Lee Soon-bae, Director of Global Growth Policy, noted, "With the implementation of this special guarantee, we will be able to alleviate the financial burdens faced by closed small business owners due to upcoming maturities and encourage rapid re-entering activities."