KakaoBank has completed agreements to launch an "interest-support guaranteed loan" with regional credit guarantee foundations in South Korea’s 17 cities and provinces, concluding with Gyeonggi and Jeju. The accumulated supply amounted to 1.2 trillion won, and interest savings for small merchants using the loans reached 23.6 billion won.

KakaoBank said on Aug. 11 it signed agreements with the Gyeonggi Credit Guarantee Foundation and the Jeju Credit Guarantee Foundation to launch "interest-support guaranteed loans" to provide financial support for local small merchants. It completed such agreements nationwide with credit guarantee foundations in 17 cities and provinces for the first time among internet-only banks.

An interest-support guaranteed loan is an interest-subsidy product for sole proprietors in which a public institution or local government covers part of the interest on a guaranteed loan. Depending on the product, it can reduce interest by up to 4 percentage points.

KakaoBank said the agreements with the Gyeonggi and Jeju credit guarantee foundations expanded the scope nationwide to 17 cities and provinces in about 2 years.

The supply volume has also increased. Through the end of July, the accumulated amount of interest-support guaranteed loans provided by KakaoBank totalled about 1.2 trillion won.

Small merchants using the product received an average rate cut of 1.99 percentage points and took out loans at an average annual rate of 2.73 percent. KakaoBank put the accumulated interest savings at 23.6 billion won.

It also expanded the limit on guaranteed loans for sole proprietors. On Aug. 5, KakaoBank raised the maximum limit for its "sole proprietor guaranteed loan" to 200 million won from 100 million won. The actual maximum loan limit can vary depending on the product and customer-specific terms.

A KakaoBank official said, "We will continue to expand financial support for sole proprietors to support revitalising local economies and strengthening the self-sufficiency of small merchants."