Seoul announced that “consultation windows exclusively for Seoul’s innovative fund for people’s livelihoods” have been established at 564 branches (except sub-branches) of the city’s primary banks (Shinhan Bank and Woori Bank) to support SMEs and small businesses affected by the COVID-19 outbreak. They began pilot operation on April 3 (Fri.) and officially opened on April 6 (Mon.). Applicants may visit the nearest branch regardless of the address of their place of business.
The special windows are responsible for consultation on and practical distribution of funds, related to ① the urgent stabilization funds for businesses negatively impacted by COVID-19 (KRW 800 billion), ② the Seoul-type 119 emergency funds for local businesses (KRW 200 billion), and ③ the Seoul-type loans for the repayment of existing financial obligations to reduce the burden of interest costs (KRW 60 billion).
① Urgent stabilization funds for businesses negatively impacted by COVID-19
First, the special windows will enable a fast process for the “urgent stabilization funds for businesses negatively impacted by COVID-19” that were implemented in February. As the originally secured amount of KRW 500 billion was doled out within just two months, the city has decided to invest an additional sum of KRW 300 billion to provide support without interruption. The conditions for receiving support remains the same: a low-interest rate of 1% for companies with confirmed cases, direct damage, and indirect damage; guaranteed rate of 0.5%; and guaranteed percentage of 100%.
② Seoul-type 119 emergency funds for local businesses
Additionally, small businesses that are experiencing double the amount of difficulties caused by the rapid decrease in sales and expense of fixed costs, such as rental fees and paychecks, can be uniformly provided loans of up to KRW 20 million through an informal guarantee review, regardless of the existing guaranteed amount. Application is available starting on April 6. Eligible beneficiaries are businesses with lower than KRW 200 million in annual revenue for the last year, an age of more than 6 months, and credit rating above 7. As the secondary preserve of 1.6% is offered in terms of support, the actual interest rate is around 1.2%. For reference, the businesses that have already received the guarantee support from the 2020 Seoul Credit Guarantee Foundation are excluded from the service.
③ Seoul-type loans for the repayment of existing financial obligations to reduce the burden of interest costs
To help small businesses with lower credit ratings using high-rate loans of over 15% change to low-rate loans, up to KRW 30 million in loans will be provided for each business. The applications will be accepted starting on April 16. The secondary preserve of 1.3% will be offered to the businesses with credit ratings below 4 for which three months have passed since they borrowed money at a high-interest rate. That makes the actual interest rate paid by the beneficiaries to be around 1.5% (based on the CD Rates as of April 1, 2020). However, businesses that have already received guarantee support related to COVID-19 from the central or municipal government are excluded from this.
The list of bank branches that operate the special windows for Seoul’s innovative funds for people’s livelihoods can be checked on the website of the Seoul Credit Guarantee Foundation (www.seoulshinbo.co.kr). Regardless of their company’s address, applicants can receive prompt service if they call a personnel of the consultation window at the nearest branch to learn about the necessary documents and visiting schedule before paying a visit.