An exterior view of the Korea Credit Guarantee Fund headquarters. [Provided by KODIT]
An exterior view of the Korea Credit Guarantee Fund headquarters. [Provided by KODIT]

The Korea Credit Guarantee Fund, known as KODIT, has been reprimanded by the Board of Audit and Inspection for funneling a program designed to support technology- and idea-driven entrepreneurs almost entirely into hospital and pharmacy openings, contrary to the program's original purpose.

The audit board made the findings public Thursday as part of its regular inspection of KODIT, saying it had ordered 12 corrective measures, including addressing the improper operation of the pre-startup guarantee program.

KODIT has run the pre-startup guarantee scheme since 2014 to support promising entrepreneurs with strong technology or ideas. The program was created to encourage commercialization of innovative technologies and promote balanced regional development.

However, an audit board analysis of the program's support from 2021 through 2025 found that guarantees for technology and knowledge-based businesses accounted for just 4.1% of the total — 34.3 billion won ($23 million).

By contrast, businesses run by licensed professionals such as doctors, pharmacists and engineers received 95.9% of support. Medical and pharmacy businesses — hospitals, clinics and pharmacies — alone took up 85.6% of the total pre-startup guarantee fund, or 714.1 billion won, concentrating support in a single occupational sector.

Over the past three years, an average of 70.8% of pre-startup guarantees for medical and pharmacy businesses went to the Greater Seoul metropolitan area. Seoul accounted for 34.6%, Gyeonggi Province for 29.2% and Incheon for 7.0%. Seoul's share has grown each year, rising from 30.5% in 2023 to 36.6% last year and 36.8% this year.

The audit also found numerous cases in which the pre-startup guarantee was used in effect to expand or relocate existing clinics and pharmacies. Under the current Small and Medium Business Establishment Support Act, reopening the same type of business within three years of closing a previous one does not qualify as a new startup.

KODIT had set no such standard. When the audit board sampled 129 medical and pharmacy pre-startup guarantee recipients who held loans of 1 billion won or more, it found that 50 of them — 38.8% — had formally closed an existing hospital or pharmacy on paper before using the guarantee to remodel, expand or relocate.

An additional 360 cases were identified in which the same individual had repeatedly received pre-startup guarantees by closing a hospital or pharmacy and reopening within three years.

In response, the audit board said it had notified the KODIT chairman to reform the pre-startup entrepreneur development guarantee program so that support is not concentrated in specific occupational groups such as the medical sector or in particular regions, and to establish measures preventing the same individual from receiving overlapping guarantee support without any time limit.


sang@heraldcorp.com