Special contribution of 2.5 billion won and 1.5 billion won in guarantee fee support; Korea Technology Finance Corp. to supply 200 billion won in total guarantees

[Provided by Shinhan Bank]
[Provided by Shinhan Bank]

Shinhan Bank said Friday it signed an MOU with Korea Technology Finance Corp. on inclusive finance support to help small and medium-sized enterprises weather the crisis stemming from the Middle East war.

The agreement was designed to ease liquidity constraints and reduce financial costs for SMEs struggling with cash management as geopolitical uncertainty in the Middle East has pushed up oil prices, raw material prices and logistics costs.

Under the MOU, Shinhan Bank will contribute a total of 4 billion won — comprising a special contribution of 2.5 billion won and 1.5 billion won ($975,000) in guarantee fee support. Korea Technology Finance Corp. will use the funds to supply 200 billion won in guarantees, consisting of 50 billion won in special contribution agreement guarantees and 150 billion won in guarantee fee support agreement guarantees.

Companies using the special contribution agreement guarantees will receive a 100 percent guarantee ratio for three years and a reduction of up to 0.4 percentage points in guarantee fees, depending on the type of damage sustained. For those using the guarantee fee support agreement guarantees, Shinhan Bank will cover up to 0.5 percentage points of guarantee fees for two years. Additional preferential guarantee limits and fee benefits through Korea Technology Finance Corp.'s special guarantee program will also apply, depending on the company type and guarantee product.

Eligible applicants are new-technology businesses that meet Korea Technology Finance Corp.'s technology guarantee requirements, including companies that have suffered canceled export contracts or delayed trade payments involving Middle East markets or are planning to export there; companies facing disruptions in raw material procurement due to oil supply imbalances and rising oil prices; companies experiencing management difficulties from rising exchange rates, oil prices and logistics costs; and other Middle East war-affected companies recommended by Shinhan Bank.

"We hope this agreement helps SMEs burdened by instability in the Middle East secure the funds they need in a timely manner and reduce their financial costs," a Shinhan Bank official said. "We will continue to work with relevant institutions to support businesses facing difficulties from changes in the external environment."

The agreement guarantees will be available starting Friday until the funding limit for each support category is exhausted.

Meanwhile, the Ministry of SMEs and Startups said Friday that 946 cases of damage, difficulties and concerns related to the Middle East war had been reported. The most common types included shipping disruptions, rising logistics costs, contract cancellations or suspensions, and unpaid receivables.


won@heraldcorp.com