Up to 100 million won (about $64,800) per company

Annual interest rate in the high-2% to low-3% range

The Construction Mutual Aid Association launched a 300 billion-won special loan program Monday. [Construction Mutual Aid Association]
The Construction Mutual Aid Association launched a 300 billion-won special loan program Monday. [Construction Mutual Aid Association]

The Construction Mutual Aid Association launched a 300 billion-won special loan program Monday to support members facing liquidity difficulties caused by rising raw material prices and a sluggish construction market.

The program was designed to proactively assist the construction industry, which has been struggling with a cash crunch driven by external factors including recent instability in the Middle East, the association said.

Since last month, the association has been offering temporary fee discounts — 10 percent on subcontract payment guarantees and construction equipment rental payment guarantees, and 30 percent on contract bond and construction performance bond extension fees. On top of those preemptive cost-reduction measures, the association said it added the large-scale special loan to minimize members' financial burden.

The special loans carry an annual interest rate in the high-2 percent to low-3 percent range — below prevailing market rates — with rates varying by credit rating, allowing members to secure emergency funds more cheaply than through commercial bank loans. The loan limit is set at 300,000 won per share of equity held, with a cap of 100 million won (about $64,800) per company. The association said it lowered the eligibility threshold to ensure small and medium-sized enterprise members can also benefit. Members who need funds can apply online through the association's internet portal without visiting a branch.

"If last month's guarantee fee cuts were aimed at reducing fixed-cost burdens at construction sites, this special loan will serve as real relief for members suffering from a cash crunch caused by high interest rates and accumulated construction cost arrears," an association official said. "Going forward, the association will continue to develop diverse financial support policies to stabilize members' operations and help the construction industry overcome the current crisis."

Meanwhile, the Construction Mutual Aid Association has been operating under an emergency management framework since last month in response to the crisis stemming from Middle East instability.


lucky@heraldcorp.com