Hana Bank will move to ease the funding burden on small and medium-sized firms struggling with rising raw material prices and increased exchange-rate volatility.

Hana Bank said on Thursday it signed an agreement with the Korea Technology Finance Corporation on inclusive financial support to help SMEs overcome a crisis stemming from factors such as the war in the Middle East.

Under the agreement, Hana Bank will contribute a total of 5 billion won, including 3 billion won in special contributions and 2 billion won in guarantee fee support. Based on the funds, the Korea Technology Finance Corporation plans to supply a total of 220 billion won in guarantee-backed support under the agreement.

Eligible firms include exporters to the Middle East, companies damaged by a collapse in supply chains for Middle Eastern crude oil, and firms facing difficulties from exchange-rate moves and rising raw material prices.

Eligible firms will receive benefits including a guarantee coverage ratio of up to 100 percent and reductions and support for guarantee fees. Hana Bank plans to lower financing costs by cutting guarantee fees by up to 0.4 percentage points and providing support of up to 0.6 percentage points.

For some firms, it will also apply preferential special guarantees, including special calculation rules, eased screening and eased approval authority, to speed up emergency liquidity supply.

Seo Yu-seok (서유석), deputy head of Hana Bank's Corporate Group, said global supply chain instability and changes in the external environment are weighing on SMEs' management. He said he hopes the financial support will help firms maintain stable business operations and lay the groundwork for sustainable growth.