Meeting small-business funding demand ... 15 billion won in additional special guarantees secured
Loans of up to 70 million won per business, with interest support for two years ... final rate expected at around 1% per year
Gwangjin-gu in Seoul is expanding the guarantee pool for its "Gwangjin-type Special Loan" program to a total of 48.88 billion won ($35.3 million) to help small businesses and self-employed operators in the district struggling with the economic slowdown and tight liquidity.
The program allows small businesses and sole proprietors based in Gwangjin-gu that lack sufficient collateral to obtain loans from partner financial institutions through special guarantees issued by the Seoul Credit Guarantee Foundation, with the district covering a portion of the interest costs.
Gwangjin-gu signed a special contribution MOU for close local economic support with the Seoul Credit Guarantee Foundation, KB Kookmin Bank, Shinhan Bank, Woori Bank and Hana Bank on Monday.
Under the agreement, Gwangjin-gu (500 million won), KB Kookmin Bank (500 million won) and Shinhan Bank (200 million won) made a combined additional contribution of 1.2 billion won ($867,000) to the Seoul Credit Guarantee Foundation, securing an additional 15 billion won in special guarantee capacity. The total guarantee pool has grown from 33.88 billion won to 48.88 billion won as a result.
Through the program, small businesses and self-employed operators in the district can borrow up to 70 million won ($50,600) per business, with repayment structured as a two-year grace period followed by equal installments over three years. The special guarantee carries preferential terms — a guarantee coverage ratio of 95 percent and an annual guarantee fee of no more than 1.0 percent.
This year the district introduced a tiered interest-support structure linked to the Seoul Metropolitan Government's interest-subsidy product to further reduce the financial burden on small businesses. Previously, a flat annual interest subsidy of 1.8 percent from Seoul and 2.0 percent from Gwangjin-gu was applied uniformly. Under the revised scheme, businesses that qualify for Seoul's 2.5 percent annual interest subsidy will receive an additional 1.5 percent subsidy from Gwangjin-gu. As a result, some borrowers will see their final interest burden fall by 0.2 percentage points compared with before, with an effective annual rate of around 1 percent expected for the first two years from the loan date.
The program is open to small businesses and self-employed operators registered and operating in Gwangjin-gu. However, businesses with outstanding tax arrears, those subject to guarantee restrictions by the Seoul Credit Guarantee Foundation, and those in sectors excluded from policy financing — including financial and insurance services and adult entertainment establishments — are not eligible.
Eligibility for the special loan is determined after a credit review and guarantee assessment by the Seoul Credit Guarantee Foundation, followed by a loan screening by the partner financial institution. For further details, applicants may contact the Gwangjin-gu Office's local economy division or the Seoul Credit Guarantee Foundation's customer center.
Gwangjin-gu District Mayor Kim Kyung-ho said the additional contributions would allow the district to expand the guarantee pool for small businesses and meaningfully ease their financial burden. "We will continue to provide on-the-ground support so that local business owners can operate with stability, free from worries about funding," he said.
seouldream01@heraldcorp.com
