Toss Bank and Gwangju Bank are moving to develop a joint corporate loan product for small and medium-sized enterprises. The two lenders plan to expand cooperation from existing joint loans for individuals into corporate finance and simplify non-face-to-face lending procedures to improve SMEs' access to financial services.

Toss Bank said on Oct. 27 it signed a memorandum of understanding with Gwangju Bank on Oct. 26 at the JB Financial Group building in Seoul's Yeouido to develop and operate a joint corporate loan product.

The agreement was arranged to push ahead with the launch of the joint corporate loan, which was designated an innovative financial service by the Financial Services Commission on Oct. 7.

Under the joint corporate loan model, an SME applies for a loan through Toss Bank's platform and the two banks each conduct screenings before jointly deciding the loan limit and interest rate. The structure then provides funds together based on a ratio agreed by the two banks.

The two banks plan to streamline corporate lending procedures, which have centered on branch visits and in-person consultations, through Toss Bank's platform. They also plan to simplify the process of submitting documents needed for loan screening to improve convenience for SME customers.

To do so, they will combine Toss Bank's non-face-to-face platform and data-based screening capabilities with Gwangju Bank's experience in corporate finance screening. The plan is to expand SMEs' opportunities to obtain loans from first-tier banks through joint funding by the two lenders.

Under the agreement, the two banks will cooperate not only on product development, launch, and operational management, but also on financial consumer protection, internal and external communications and publicity, and exchanges of human resources, among other areas.

Toss Bank CEO Eun-mi Lee (이은미) said it was meaningful to expand the cooperation achievements confirmed through the first joint loan product, "Hamkke Loan," into corporate finance. She added that the bank would improve access to non-face-to-face corporate lending and build a win-win growth model to support the growth of SMEs.

Gwangju Bank President Il-seon Jeong (정일선) said the lender would continue to develop differentiated financial services based on cooperation with Toss Bank, while working to revitalise the regional economy and practise inclusive finance.