South Korea to provide 4.5 trillion won in loans to regional enterprises

The Financial Services Commission (FSC) announced a plan to supply 4.5 trillion won in low-interest guaranteed loans to key small and medium-sized enterprises (SMEs) and mid-sized companies located outside the Seoul metropolitan area over the next three years.

Under the agreement, the banking sector will contribute 300 billion won to the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation. These institutions will provide guarantees approximately 15 times the amount of the contribution, enabling the massive loan supply. The program aims to support roughly 9,000 companies across 14 provinces and cities, with funding distributed based on regional evaluations.

Additionally, the FSC is implementing reforms to the accounts receivable system. Starting in February 2027, the maturity period for accounts receivable, including loans secured by such receivables, will be shortened to within 60 days. The commission also plans to fundamentally abolish the right of recourse for new accounts receivable-backed loans starting in January 2027. This measure prevents banks from demanding repayment from suppliers if a purchasing company fails to pay, a move intended to protect smaller vendors from sudden debt obligations.