Jeollanam-do provides 400 billion KRW low-interest loan support to small and medium-sized enterprises… Can it alleviate operational difficulties?

Jeollanam-do has decided to provide low-interest loan support totaling 400 billion KRW to small and medium-sized enterprises (SMEs) facing operational difficulties. Against the backdrop of slowing economic growth and high interest rate trends, this move can be interpreted as a measure by local governments to strengthen the financial safety net to help businesses survive.

This financial support is roughly divided into bank funds and policy funds, targeting all SMEs within Jeollanam-do. Regarding bank funds, if a business obtains a loan of up to 300 million KRW from a commercial bank, Jeollanam-do will cover a certain portion of the loan interest each month (annual interest rate of 1.1% to 2.0%). This structure directly helps businesses reduce their high-interest burden.

The policy funds are relatively larger in scale and allow for broader uses. Through the Jeollanam-do SME Development Fund, businesses can obtain loans of up to 2.3 billion KRW within eight years. These funds can be used not only for facility investments such as factory construction or equipment purchase but also for operational expenses. The total policy fund support includes 53 billion KRW for facility investments, 7 billion KRW for supporting social enterprises, and 10 billion KRW for construction industry-specific support, totaling 400 billion KRW.

Interest rates vary depending on the characteristics of the enterprise. Riskier enterprises are eligible for a fixed annual interest rate of 2.5%, while regular SMEs are subject to a floating rate of 3.0%. Compared to market rates, these are relatively low, providing substantial economic support to SMEs facing financial pressure.

Jeollanam-do plans to use this type of financial support not only to stabilize the operation of local SMEs but also to create new jobs and enhance regional economic competitiveness. In particular, by expanding the scope of fund usage to include labor costs, rent, R&D expenses, and other areas, it also creates conditions for enterprises to solidify their internal foundations.

In the context of ongoing uncertainty in financial markets, this trend is expected to attract attention as a locally-led enterprise financial support model. Besides government subsidies or policy bank loans, there is also potential for such liquidity-providing schemes led by local autonomous groups to spread to other regions in the future.