K Bank is teaming up in succession with North Jeolla Province and the cities of Pohang and Gumi to help revive local small business economies by supporting small merchants.

K Bank said on Feb. 23 it signed separate special guarantee agreements for small merchants with North Jeolla Province on Feb. 9, Pohang on Feb. 6 and Gumi on Feb. 13, and will provide financial support to sole proprietors and small merchants struggling due to a local economic slowdown.

With North Jeolla Province, the bank focuses on supplying funds. With Pohang and Gumi, it expanded benefits for the first time through direct agreements with basic local governments beyond province-level agreements in the banking sector.

K Bank will work with North Jeolla Province and the Jeonbuk Credit Guarantee Foundation on a financial support programme for small merchants. For this, it will make a special contribution of 800 million won, the largest among local government agreements signed in February, and provide a total of 20 billion won in low-interest working capital to small merchants in the province.

The North Jeolla agreement subdivides eligible recipients into three tracks: management difficulty businesses with loans of up to 70 million won, first-meeting businesses with loans of up to 100 million won and growth development businesses with loans of up to 200 million won. It provides tailored loan limits based on industry and sales conditions. Loan terms are up to 8 years and the guarantee ratio is 90 percent. The province will subsidise annual interest of 1.0 percent for 3 years to ease the burden of financial costs.

The agreements with Pohang and Gumi are K Bank's first guarantee agreements signed directly with basic local governments without going through a provincial government. For the agreements with the North Gyeongsang Credit Guarantee Foundation, K Bank will contribute 200 million won to each city and implement about 5 billion won in special guarantees.

For small merchants in Pohang and Gumi, the local governments will subsidise 3 percent of annual loan interest for 2 years, sharply reducing interest burdens. The loan limit is up to 50 million won, or up to 100 million won if certain conditions are met, and the guarantee ratio is 100 percent. Repayment terms are operated flexibly, including a 2-year grace period followed by instalment repayment over 3 years.

All three local government agreement products can be applied for non-face-to-face via the K Bank app or the credit guarantee foundation app, improving convenience for small merchants. Early repayment fees are fully waived.

A K Bank official said the agreement includes support for various types of small merchants in North Jeolla, and provides tangible benefits in Pohang and Gumi by directly partnering with basic local governments and greatly expanding interest support. The official said the bank will continue efforts to practise inclusive finance to help local economic recovery.