[Korea Federation of SMEs]
[Korea Federation of SMEs]

Referral relay event runs through Sept. 30

Both referrers and new members receive 50,000-won Naver Pay vouchers

Fund holds lending rate steady as Bank of Korea raises benchmark rate

New enrollments in South Korea's small business mutual aid fund have risen 48 percent this year, the Korea Federation of SMEs said Tuesday, announcing a referral event to drive further membership growth.

The federation said it will run a "mutual aid fund membership referral relay" event through Sept. 30.

Under the program, existing members who refer a new business that completes enrollment during the event period will each receive a 50,000-won ($35) Naver Pay gift voucher. Members may make multiple referrals, and new members who refer additional businesses are also eligible.

The SME mutual aid fund is a loan program exclusively for small and medium-sized enterprises, introduced in 1984. Member companies can borrow unsecured, short-term operating funds of up to three times their paid-in contribution balance. When real estate is offered as collateral, the borrowing limit rises to up to 10 times the balance. Some local governments also provide interest-subsidy support to fund members.

Rising market rates are adding to the financial burden on small businesses. The Bank of Korea's Monetary Policy Board raised the benchmark interest rate by 0.25 percentage points to 2.75 percent per annum on July 16. The average new-loan interest rate at deposit-taking banks stood at 4.31 percent per annum in June, up 0.12 percentage points from the previous month, according to the Bank of Korea.

The mutual aid fund has kept its lending rate unchanged since July last year. As of the end of July this year, new enrollments totaled 2,617, up 48 percent from 1,766 in the same period last year.

The federation said it hopes the event will encourage existing member companies to spread awareness of the fund among their business partners and neighboring firms, strengthening the mutual-aid network among small businesses.

"The mutual aid fund has been a reliable safety net for small businesses and self-employed operators struggling with sluggish domestic demand and other difficulties," said Lee Chang-ho, head of the federation's mutual aid business division. "We hope this referral relay will allow more small businesses to receive meaningful financial support within the fund's management safety net."


hong@heraldcorp.com