IBK Industrial Bank of Korea will provide 500 billion won in financial support for small and medium-sized enterprises facing temporary funding difficulties. It is the first among banks to apply the Korea Overnight Financing Repo Rate (KOFR) to a loan benchmark rate, widening companies' choice of interest-rate options.

The bank said on Oct. 25 it will launch the KOFR short-term liquidity support loan from Oct. 26. The product is designed to support SMEs that struggle to secure funds over the short term due to delayed collection of sales proceeds or seasonal funding demand. Companies facing liquidity shortfalls due to rising payroll and rent burdens are also eligible.

The product applies KOFR, which is calculated based on the overnight repurchase agreement (RP) rate traded with government bonds and Bank of Korea monetary stabilization bonds as collateral. The bank said it was the first in the banking sector to introduce KOFR as a loan benchmark rate, expanding the range of interest-rate benchmarks that SMEs can choose from.

It will offer up to a 0.3 percentage-point rate cut for SMEs located outside the capital area. It will not charge an early repayment fee even if the loan is repaid before maturity, reducing the cost burden of early repayment.

An official at the bank said, "We diversified interest-rate benchmarks by introducing KOFR to banking-sector loans for the first time." The official added, "We hope this will help SMEs facing short-term funding shortages secure liquidity."