The government is stepping in to ease the financial burden on social corporations that struggle to raise funds. It will facilitate loans for social corporations through guarantees and also push to support loan interest.
The Ministry of Employment and Labor (MOEL) and the Korea Social Enterprise Promotion Agency (KOSEA) on the 3rd signed a business agreement with the Korea Credit Guarantee Fund (KODIT) and seven banks for the "social corporations interest subsidy program." The key is that when a social corporation takes out a bank loan, the government will cover part of the interest on its behalf.
Until now, social corporations have found it hard to obtain bank loans due to low collateral or credit ratings, and even when they did borrow, the interest burden was heavy. This program was designed to solve these problems by bundling guarantees, loans, and interest support into one.
In the social value assessment, the government will support an annual 2.5 percentage point interest differential for corporations rated "excellent" or "outstanding," up to 300 million won, and up to 200 million won for other corporations. This is expected to generate an annual private financing support effect of about 25 billion won.
Seven banks—IM Bank, Shinhan Bank, Woori Bank, Hana Bank, IBK Industrial Bank of Korea, KB Kookmin Bank, and NH Nonghyup Bank—are participating in this program. Applications will be accepted starting on the 10th of this month through visits to Korea Credit Guarantee Fund (KODIT) branches, phone consultations, or the website.
Kwon Jin-ho, director general of the integrated employment policy bureau at the Ministry of Employment and Labor (MOEL), said, "The interest subsidy program is an important starting point for revitalizing social solidarity finance," adding, "We will actively support social corporations so they can realize social value, such as solving social problems."