Financial Services Commission to Double Small Business Loans Through Supplementary Budget

Supplementary Budget Discussed at Policy Consultation Meeting
Interest Refunds Planned for Policy-Based Finance Users

Financial authorities are considering doubling financial support for small business owners compared to existing levels, in preparation for instability in the Middle East and economic slowdown.

On March 19, the Democratic Party of Korea and the government held a party-government consultative meeting at the National Assembly and discussed a supplementary budget bill containing these measures. Both parties agreed on the need for related budget allocations to support small business owners and reduce the financial burden on low-income households.

The Financial Services Commission shared a plan to double the scale of IBK Industrial Bank of Korea's Small Business Hope Dream Loan from the current 1 trillion won to 2 trillion won. To facilitate this, there was also mention of injecting 157 billion won in capital into Industrial Bank of Korea.

In addition, there was discussion of a plan to refund interest to diligent borrowers among users of policy-based financial products for low-income households. Specifically, the plan would refund a portion of interest to borrowers who have made repayments for more than six months under the policy products Sunshine Loan 15 and the Special Guarantee for Lowest Credit Borrowers, both managed by Korea Inclusive Finance Agency. The number of eligible borrowers is estimated at 248,000, with the total refund amount projected at around 52 billion won. While the interest rates for these two products have dropped from the 15% range to around 12% this year, borrowers who used these products up to last year are still subject to higher rates.

Furthermore, there was discussion of expanding the supply of emergency special guarantees from Korea Credit Guarantee Fund by utilizing the budget of the Ministry of SMEs and Startups. The size of these guarantees could be expanded from the current 3 trillion won to 5.5 trillion won.

The Financial Services Commission estimates that a total supplementary budget of 200 billion won will be required for these measures.

This content was produced with the assistance of AI translation services.