Songpa-gu in Seoul launched a second round of special credit guarantee support worth 20 billion won ($14.1 million) on Aug. 3, aimed at helping small businesses and self-employed operators struggling with liquidity. Combined with the 20 billion won disbursed in the first half of the year, the district will provide a record 40 billion won in total this year.
The move comes as operating conditions for small business owners continue to deteriorate amid weakening consumer spending. According to OpenUp, a commercial district analysis platform, nationwide restaurant sales have been declining since 2023, falling to 78.42 trillion won last year — a 6.7 percent drop over two years. Sales in the first half of this year reached 38.42 trillion won. Closures have also surged: in the first half of this year alone, 7,305 fried chicken restaurants, 3,139 bakeries and 18,350 cafes shut down.
In response, Songpa-gu is adding 20 billion won in the second half of the year, following the 20 billion won first-round program it ran earlier. The support allows local small businesses and self-employed operators who lack collateral and face difficulty securing bank loans to access financing through guarantees from the Seoul Credit Guarantee Foundation.
The district has also lowered the bar for applicants in this second round. Previously, only businesses that had been operating continuously in Songpa-gu for at least six months were eligible. That requirement has now been scrapped, allowing newly registered startups to apply immediately after obtaining their business registration.
The pool of partner financial institutions has expanded as well. KB Kookmin Bank, saemaul credit unions and Kakao Bank have joined the existing lineup of Hana Bank and Shinhan Bank, bringing the total number of participating lenders to five.
Eligible applicants are small businesses and self-employed operators registered in Songpa-gu. Those with outstanding national or local tax arrears, those listed in credit risk databases, or businesses in restricted industries are excluded.
The guarantee ceiling is 50 million won per business. The guarantee fee is 0.8 percent per year for new applicants and 1.0 percent per year for additional support, with loan interest rates tied to a three-month floating rate. Repayment terms allow for a one-year grace period followed by equal installments over four years.
After applying, businesses undergo a credit review by the Seoul Credit Guarantee Foundation, and a guarantee certificate is issued before the loan is disbursed through a partner financial institution. Final eligibility and the approved amount are determined through the review process.
"Timely support when it is needed most — that is what public administration is for," district mayor Seo Gang-seok said. "By expanding this year's special credit guarantee program to a record 40 billion won and removing the operating-period requirement, we aim to provide real, practical help to small business owners — including those just starting out."
Applications are accepted from Aug. 3 through the partner financial institutions and the Seoul Credit Guarantee Foundation until the guarantee limit is exhausted. Full details on eligibility conditions, required documents and restricted industries are available on the Songpa-gu website under the official notices and announcements section.
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