Gyeonggi-do decided reduce interest loans for small and medium enterprises, starting from July 1. This reduction is to stable management and improve the structures of minor enterprises and also support initial expenses for young companies.

Interest rates for operational funds vary from 4.75%~6.0% to 4.45%～5.7% depending on the loan term, meaning a reduction of 0.3%p compared to previous rates. Interests for loans on commencement and intensifying competitiveness cuts to 0.7%p from 5.08% bringing interest rates down to 4.38%.

Reduction comes to effect starting from July 1, 2003 and reduction to interests for loans on commencement and intensifying competitiveness applicable retroactively to new loans and existing loans made after 1996.

Only new operational funds are effected and existing loans made after January 18, 2002 are reduced from 5.25% (mortgage on real estate 6.25%) to 4.95% (mortgage on real estate 5.95%).

This interest rate reduction is to financially support minor enterprises in Gyeonggi-do that are having operational difficulties due to the duration of economic stagnation. As the interests on national treasury and the loan rates from financial agencies (Prime-rate) are cut down, surplus from operational funds for minor enterprises are reflected in the overall reductions in loans.

According to the interest reduction, 7,500 minor enterprises that have been receiving the existing Gyeonggi-do policy fund will be relieved from an interest defrayment of about 41 billion Won annually. Demands on Gyeonggi-do policy funds are forecasted to increase hereafter.

As interests for loans on commencement and intensifying competitiveness reduce from 5.9% to 4.38% (1.52%p) this year, the annual interests paid by minor enterprises receiving a loan of 10 billion Won will have a reduction of 15 million Won. Active inauguration of minor enterprises and improvement to operations is expected to aid local economy.