The Jeju Credit Guarantee Foundation has launched a program to help small businesses by limiting interest rates on loans it guarantees. Here’s Mike Laidman to explain.

Report


Mr. Lee Seong-jin runs a food processing company in Jeju.

He initially took out a loan to start his business, but now, high interest rates are making paying it back a big burden.

And as interest rates rise, operating costs climb with them.


Interview
Lee Seong-jin / Owner, Food processing company
Banks are advertising low interest rates, but when a business owner tries to take out a loan, they actually offer a 5-6% rate. That’s a big burden.
<인터뷰 : 이성진/식품가공업체 대표>
"최저금리 시대라고 이야기 하지만 실질적으로 대출을 받으려면 저금리를 적용해주지 않아요. 보통 5~6%를 적용하니까 부담이죠."

Currently, loan interest rates are set by the borrower's credit rating.

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Credit rating determines loan interest rate


As market interest increases, loan interest rates also move up. This situation imposes severe strain on small business owners.


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New policy aims to rein in interest rates


To go some way towards lightening this strain, the Jeju Credit Guarantee Foundation signed an agreement on a loan interest ceiling policy with local banks.

The ceiling policy limits loan interest rates to 3 percent regardless of the market interest rate.


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Interest rates on guaranteed loans limited to 3%


When the Jeju Credit Guarantee Foundation guarantees a loan in full, the loan interest rate is set at up to 2.5 percent. When loan is guaranteed in part, the rate is set at lower than 3 percent.


The guaranteed term can be extended to 6 years, which should go a long way towards lessening the strain put on business owners.


Interview
Song Deuk-yeong / Jeju Credit Guarantee Foundation
We believe this policy will help small and independent businesses cut financial expenses.
<인터뷰 : 송득영/제주신용보증재단 기업지원본부>
"제주신용보증재단을 이용하는 소상공인이나 자영업자들이 금용비용을 절감할 수 있도록 유도하고 가계에 보탬이 될 것으로 생각합니다. "

Total household loans exceed 10 trillion won in Jeju.


[Reporter] Mike Laidman
[Camera] Ko Mun-su

Now that this loan interest ceiling policy has been introduced, the snowballing interest rates on loans for local small business owners should start to ease.

Mike Laidman, KCTV