BUSAN — Cumulative support under the Busan Credit Guarantee Foundation's livelihood relief guarantee program has topped 100 billion won ($69 million) just over a month after its launch, driven by low-interest loans carrying an effective rate of just over 1% in the first year.
The guarantee program, run jointly by the foundation and the Busan Metropolitan Government, had provided 107.9 billion won to 4,124 businesses as of Oct. 21, the foundation said on the 23rd. Demand climbed quickly after applications opened on Sept. 17.
Small business owners with mid- to low credit scores — a NICE personal credit score of 879 or below — accounted for 32% of recipients. The foundation said the program has also improved funding access for small business owners who struggle to borrow from financial institutions.
The Busan city government covers 4 percentage points of the loan interest for the first year and 2 percentage points for the following four years, leaving borrowers with an effective rate of just over 1% in the first year. Each business can receive up to 30 million won, with a choice between equal installment repayment over five years or a one-year grace period followed by four years of installments. The program is divided into guarantees for new working capital and conversion guarantees that refinance existing loans backed by foundation guarantees.
Applications are accepted through the foundation's guarantee app Bojeung Dream, at foundation branches, and at branches of Busan Bank, KB Kookmin Bank, Hana Bank, Shinhan Bank and Woori Bank.
"All of our staff are now focused on this work, and the program has entered a stabilization phase," said Kim Hyun-joon, chairman of the foundation. "We will expand tailored guarantees that reflect demand on the ground so that funds reach local small business owners quickly."