[Exclusive] KODIT to Scale Up Guarantees After COVID-19, Nearing 80 Trillion Won Next Year

Guarantee Volume Set at 79.1 Trillion Won for Next Year
Increase of 2.6 Trillion Won Compared to 2026 Target
Policy Guarantees Strengthened in Line with Expansion of Productive Finance

The Korea Credit Guarantee Fund, which had reduced the size of guarantees expanded in response to COVID-19, will increase its total guarantee capacity again next year to nearly 80 trillion won. This move is seen as an effort to strengthen the institution's policy guarantee function in order to support a transition to more productive financing, despite concerns about financial soundness due to rising default rates.

According to related ministries on September 16, KODIT is pursuing a plan to operate its guarantee limit in 2027 at 79.1117 trillion won. This is an increase of 2.6117 trillion won from this year's target of 76.5 trillion won. Even compared to this year's internal forecast of 77.9775 trillion won, it is 1.1342 trillion won higher.

KODIT is a policy financing institution that provides guarantees for various debts, including loans and corporate bond issuances, for companies with insufficient collateral but high growth potential, thereby supporting their fundraising efforts. If a company that received a guarantee fails to repay its debt, KODIT makes the payment to the financial institution in its place.

KODIT's total guarantee amount reached its peak in 2022 due to strengthened support in response to the COVID-19 situation, but then began to decline. It was 81.6227 trillion won in 2023, 79.4711 trillion won in 2024, and 77.6786 trillion won in 2025, marking three consecutive years of decline. This decrease was largely due to the expiration of temporary guarantees introduced for COVID-19 and the natural reduction in guarantee balances as existing guarantees matured.

Until last year, KODIT had focused on reducing its total guarantee volume over the medium to long term. The medium-term financial management plan at the time included measures to reduce the total guarantee size from about 78 trillion won in 2025 to around 74 trillion won by 2029, a reduction of about 4 trillion won. This was based on the judgment that the expanded guarantee volume during the COVID-19 period needed to be normalized and financial burdens managed amid rising defaults and subrogation payments.

However, as the government began to actively shift financial resources from real estate and collateral-focused areas to productive sectors such as advanced industries, venture companies, and regional businesses, KODIT also changed the direction of its guarantee operations toward expansion. This decision also reflects the need to respond to funding difficulties faced by companies in times of growing domestic and international uncertainties, such as instability in the Middle East, and to support the growth of advanced strategic industries and innovative companies.

KODIT initially set this year's guarantee limit at 76.5 trillion won, but its recent internal forecast has been revised upward to 77.9775 trillion won. Based on this forecast, the total guarantee amount will increase for two consecutive years: from 77.6786 trillion won last year to 77.9775 trillion won this year, and 79.1117 trillion won next year.

Small and medium-sized companies lacking sufficient collateral can receive bank loans or issue corporate bonds through KODIT's guarantees. As KODIT raises its total guarantee volume, the credit risk borne by financial institutions decreases, increasing the likelihood that private capital will flow into innovative businesses and future industries.

Next year as well, KODIT plans to strengthen its guarantees, focusing on fostering regional companies and supporting innovation-driven growth. The fund intends to offer a combination of guarantees, investment, and consulting services to innovative and venture companies, and to expand direct issuance of asset-backed securities to facilitate corporate fundraising while lowering financial costs.

However, expanding guarantees may increase the financial soundness burden for KODIT. As the financial conditions of small businesses worsen, there has been a growing concern over the increases in subrogation payments that KODIT makes to financial institutions and the indemnity claims it must collect from debtors. As of the end of 2025, KODIT's general guarantee default rate reached 3.7%, marking the highest level in nine years since 2016.

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