Korea Technology Finance Corporation

Credit Guarantee

Special Guarantee Programs


Overview

When necessary to boost guarantee support to ensure an efficient delivery of particular government policies, KOTEC arranges special guarantee programs. Above all, in a bid to financially include more eligible SMEs, preferential supports are rendered by these programs. The preferential supports include expansion of guarantee coverage ratio, deduction of guarantee fee, loosening of guarantee approval criteria and/or swift guarantee handling procedures.


While, for instance, all the basic guarantee procedures remain unchanged, the eligibility criteria can be modified to some degree to better accommodate the target group of a certain guarantee program. In many cases, the guarantee approval criteria can be loosened so that even those SMEs with low creditworthiness can benefit from the program as long as they meet the eligibility criteria. (e.g. startups with less than 5 years of business operation)


A variety of special guarantee programs were provided by KOTEC throughout the whole stages of business life cycle. In particular, capitalizing on its technology appraisal and technology financing capability, KOTEC is in the unique position of offering special financing programs to facilitate SMEs technology innovations. Introduced here are, among other guarantee programs, the ones which represent KOTEC's visions and policy priorities.


Programs for Pre-seed and Early-Stage Companies

Preliminary Guarantee Program for Would-Be Startuppers View

Program Overview

The guarantee amount is determined at the stage of pre-startup via assessment of startup projects. Upon completion of business registration, the guarantee support is extended.


Eligible Companies

Ordinary Startup: Would-be business founders who plan to commercialize excellent technologies or business ideas.

Expert Startup: Startups to be founded by experts including professors, researchers, technical masters and master mechanics etc.


Procedure

Procedure chart
Steps Related Activities
Technology Appraisal

Determination of guarantee amount based on the assessment of commercial viability of the startup projects

Notification of determined guarantee amount

Mentoring

Provision of startup mentoring programs including necessary information for a successful business starting

Business Founding

Business registration and getting the business started

Guarantee Review

On-site visit to business premises

Verify the business is running as planned

Conduct technology appraisal using KTRS and assign Technology Ratings(AAA~D)

Provision of Guarantee

Issuance of letter of guarantee

Disbursement of guaranteed loan


Eligible Credit Facilities

Working capital loans for the startup funding

Fixed asset loans for paying security deposit of business premise


Guarantee Limit by technology ratings

Guarantee Limit
  CCC B, BB BBB A and Higher
Ordinary startup

0.1 billion won

0.3 billion won

0.5 billion won

Expert startup

0.1 billion won

0.3 billion won

0.7 billion won

1 billion won


Preferential Supports

Guarantee coverage ratio: 100%

Guarantee fee deduction: 0.7%p deduction


New Startup Guarantee Program Free of Personal Guarantee Requirement View

Program Overview

Normally, the owners, key persons or CEOs of applicant companies are required to provide additional personal guarantee for the payment of the debt for fear that the companies fail to do so.

In this program, however, the startup founders are free of the responsibility to stand as a guarantor. The program encourages people to venture into starting businesses by reducing the burden of business failure, contributing to activation of business startup and to the increase of job creation.


Eligible Companies

Corporations with less than 7 years of business operation meeting following conditions

- Those who are newly applying for the guarantee

- Those who are benefiting guarantee support only through this program


Preferential Supports

Exemption of responsibility to provide a third-party personal guarantee
(Only when real owner of the company holds the position of the representative director)


Eligible Credit Facilities

Working capital loan : 5-year long-term loan with installment payment schedule

Fixed asset loan: 8-year long-term loan with installment payment schedule


Other Requirements

Conclusion of 'Transparent Management Agreement' which requires the company to comply with accounting principles and notify major changes in business management to KOTEC in order to prevent the moral hazard arising from the personal guarantee exemption.


Special Guarantee Program for Youth Startup View

Program Overview

This program was designed to encourage young talents with fresh ideas to start businesses and to expand the future growth potential of the national economy in the era of jobless growth.


Eligible Companies

Companies with less than 5 years of business operation whose owner is aged 17 to 39


Eligible Credit Facilities

Working capital loan for startup funding and business operation

Fixed asset loans for paying security deposit of business premises

Fixed asset loans for purchasing production equipments and facilities


Guarantee Limit per a Company

Up to 300 million won


Preferential Supports

Guarantee fee rate: pegged at 0.3% per annum

Guarantee coverage ratio: 95% of the guaranteed loan
(100% coverage is applicable where the company is less than one year old and the guarantee amount is less than 100 million won)


Customized Program for Startup Growth View

Program Overview

In order to better accommodate varying demands for startup supports, KOTEC provides customized and intensive guarantee supports for the sectors where technology-based business startups are booming and job growth potential thereof is relatively high.


Eligible Startup Sectors

Eligible Startup Sectors
Sectors Eligible Companies
Startups in Knowledge and Culture Industry

Businesses in innovative knowledge-based service industry and cultural contents industry, etc.

Challenger startups founded by science and engineering majors

Manufacturing businesses whose CEOs(or actual owners) have majored in science and engineering

Startups based on Technology career/root industry

Manufacturing businesses (including root industry*) whose CEOs(or actual owner) are aged 40 to 59 and with at least 10 years of experience in the same business field
* Root industry includes such areas as casting, molding, welding, thermal treatment, surface treatment and plasticity processing.

Hi-tech & Growth-linked Startups

Any of following businesses:

Businesses related with high technologies and products such as nano-convergence or display, etc.

Businesses in knowledge-based manufacturing industry

Businesses in the new growth industry


Eligible Credit Facilities

Working capital loan for startup funding and business operation

Fixed asset loans for paying security deposit of business premises

Fixed asset loans for purchasing production equipments and facilities


Preferential Supports

Guarantee coverage ratio: 90% of the guaranteed loan
(100% coverage is applicable where the company is less than one year old)

Guarantee fee rate per annum

- Businesses with less than 3-year operation: 0.4%p deduction
   (fee rate is fixed at 1.0% where the guarantee amount is less than 100 million won)

- Businesses with less than 7-year operation: 0.3%p deduction
   (fee rate is fixed at 1.0% where the guarantee amount is less than 100 million won)


Meister technology Startup Program View

Program Overview

This program was introduced to encourage the startup foundations by the technicians or skilled workers who are working at big-and-medium-sized enterprises.


Eligible Companies

Businesses whose CEOs have more than 5 years of working experience at the big-and-medium-sized enterprises in the same field of technology.

Spinoffs that are founded by the technicians who resigned from the big-and-medium-sized enterprises.


Preferential Supports

Eligible for the 'New Startup Guarantee Program Free of Personal Guarantee Requirement'

Guarantee fee rate per annum: 0.7%p deduction
(fee rate is fixed at 1.0% where the guarantee amount is less than 100 million won)

Recommendable for the Guarantee-Linked Investment

Technology and management consulting supports


Programs for Scale-up and Expansion-Stage Companies

Guarantee Program for Kibo-Star Ventures View

Program Overview

This program was designed to help promising business ventures with a global competitiveness to become a 'Korean Hidden Champion'


Eligible Companies
Businesses who meet all the following requirements

Venture Businesses with more than 3 years of business operation

Technology Ratings: A and above

Equity capital: more than 2 billion won


Preferential Supports

Guarantee Coverage: 95%

Guarantee fee rate: pagged at 0.5% per annum

Recommendation for the Guarantee-Linked Investment and other investments from private venture capitals.

Recommendation for Inno-Biz certification

IPO Support: provision of professional and in-depth consulting for IPO strategies free of charge

Support for PR activities


Special Guarantee Program for Companies Engaging In Technological Convergence View

Program Overview

Technological convergence can bring a disruptive change into current technological landscape and it can be used as a new growth engine. In a bid to encourage companies to actively take advantage of the technological convergence, KOTEC provides guarantee support for the companies that are engaging in the technological convergence projects.


Eligible Companies

Companies that are in the middle of pursuing technological convergence

Companies that are mass-producing converged products.


Preferential Supports

Guarantee fee rate : 0.3%p deduction

Relaxation of eligibility criteria for SMEs with low credit score


Guarantee Program for M&A View

Program Overview

KOTEC extends its guarantee support for financing need arising from the merger and acquisition of companies in order to facilitate restructuring of SMEs and prevent prominent technological inventions from vanishing unnoticed.


Eligible Companies

Companies that are engaging in M&A activities


Eligible Credit Facilities by M&A phase

Eligible Credit Facilities by M&A phase
Phase Eligible Credit Facilities
M&A

Working capital loan for acquiring companies

R&D

Working capital loan for conducting R&D with acquired technologies

Purchase of Facilities

Fixed asset loan for purchasing production equipments and facilities

Commercialization

Working capital loan for commercialization of acquired technologies and mass production


Preferential Supports

Provision of guarantee support in a comprehensive manner covering whole cycle of M&A procedure


Programs for Tech Innovation & Job-Creation

Guarantee Support for R&D Activities View

Program Overview

This program was introduced in 2008 in order to help SMEs that face difficulty in financing their R&D efforts despite good technological competence. By facilitating innovative SMEs' R&D activities, the program is expected to lead SMEs' technological advance, contributing to the GDP growth and job creation.


Program Features

Provides comprehensive supports throughout the entire life cycle of R&D projects

R&D life cycle are broken down into three phases: Development Phase, Pre-Commercialization Phase, Commercialization Phase


Technology Appraisal Models and Methods employed at each phase

Eligible Credit Facilities by M&A phase
Phase Appraisal Models Appraisal Methods
Development R&D Appraisal Model

Analysis on commercial viabilityof the R&D project

Analysis on economic feasibility

Pre-Commercialization
Commercialization KTRS

Analysis on commercial viability of the R&D project


Eligible Companies

Eligible Credit Facilities by M&A phase
Phase Eligible Companies
Development

Companies with Technology Rating B and above

Companies whose R&D project is deemed 'economically feasible'

Pre-Commercialization
Commercialization

companies who have successfully completed R&D prodects self-funded or funded by the government or public agencies within the past 5 years.


Eligible Credit Facilities

Eligible Credit Facilities by M&A phase
Phase Eligible Credit Facilities
Development

Working capital loan for covering R&D costs

Pre-Commercialization
Commercialization

Working capital loan for commercialization and mass production

Fixed asset loan for purchasing production equipments and facilities


Preferential Supports

Guarantee coverage ratio

- For development and pre-commercialization phases: 95%~100%

- For commercialization phase: 85%~95%

Guarantee fee rate : 0.3%p deduction


Guarantee Programs Based on Intellectual Property(IP) View

 Guarantee backed by IP Valuation

Program Overview

In this program, KOTEC conducts IP valuation to determine the monetary value of subject IP and provides credit guarantee up to the value amount of the IP in order to help the IP holder to commercialize it successfully and to facilitate the IP financing in Korea.


Eligible Technologies

Intellectual properties such as patent rights, copyrights, trademark rights, etc.


Eligible Companies

Companies that are holding IP rights and trying to commercialize them

Companies whose Technology Rating is B or higher


Eligible Credit Facilities

Working capital loan intended for IP commercialization


Technology Appraisal (Two-prong approach)

1st: Valuation of IP by using valuation model (Output : monetary value)

2nd: Assessment of the commercial viability by using KTRS (Output : ratings)


Acquisition of Collateral

KOTEC asks the guaranteed company to pledge the IP as collateral in order to prevent transfer of the IP after guarantee support.


Preferential Supports

Eligible Credit Facilities by M&A phase
Technology Rating BB or lower BBB or higher
Guarantee Coverage Ratio 90% 95%
Guarantee Fee Rate Reduction 0.3%p 0.5%p

 Guarantee for IP Acquisition


Program Overview

KOTEC provides guarantee support to those who are planning to acquire an IP right from a third party and commercialize it, contributing to the activation of technology transfer and IP financing in Korea.


Eligible Companies

Companies in the process of the IP acquisition to commercialize IPs in such ways as purchasing, licensing, etc.


Eligible Credit Facilities

KOTEC provides comprehensive supports throughout the entire phases of IP acquisition and commercialization


Eligible Credit Facilities by M&A phase
Phase Eligible Credit Facilities
Acquisition of IP

Working capital loan for initial deposit, royalty and purchasing price

Commercialization

Working capital loan for additional R&D costs

Working capital loan for making prototypes

Mass Production

Working capital loan for commercialization and mass production

Fixed asset loan for purchasing production equipments and facilities


Technology Appraisal (Two-prong approach)

1st: Assessment of the commercial viability by using KTRS (Output : ratings)

2nd: Valuation of IP by using valuation model in case where the amount of guarantee application exceeds 300 million won


Preferential Supports

Guarantee coverage ratio : 95%

Guarantee fee rate : 0.3%p deduction


Guarantee for Climate Technology View

Program Overview

The launching of the 'New Climate Regime' in November 2016 in the wake of the Paris Accord brought home to policy makers the necessity of nurturing climate technology firms. In tandem with the government policy direction, KOTEC introduced this program to provide financial support to climate technology SMEs as a leading climate financing institution in Korea.


Eligible Companies

SMEs that are proved to possess climate technologies via eligibility screening

Companies whose Technology Rating is B or higher


Eligible Credit Facilities

Working capital loan / fixed asset loan


Technology Appraisal

Use of CTRS(Climate Technology Rating System) in case where the company is in the process of commercializing climate technology.


Preferential Support

Guarantee fee rate : 0.2%p deduction


Guarantee for Cultural Contents Completion View

Program Overview

A guarantee is issued to a financial organization so that a culture content producer can procure funds necessary for cultural goods production. When productions are finished and delivered, the loan is repaid with the sales revenue or related profits


Eligible Companies

Cultural contents providers
(Cultural contents include cartoon, animation, characters, digital contents, music, movie, broadcasting, game and art performance)


Guarantee Limit

Up to 5 billion won per a project


Technology Appraisal

Application of the 'Cultural Contents Appraisal Model'


Program Procedure

Recommendation
Committee

Technology
Evaluation

Loan Approval

Management Committee
Korea Creative Content Agency KOTEC Financial Institutions Korea Creative Content Agency

Pre-conditions to be met

Sales revenue and profit arising from the sales of cultural products should be used to pay the guaranteed loan

The account receivable arising from pre-order sales should be transferred to KOTEC


Preferential Supports

Guarantee coverage ratio : 95%

Guarantee fee rate : 0.2%p deduction


Guarantee Support for Fin-Tech Companies View

Program Overview

This program was initiated by KOTEC in its attempt to ensure efficient financial support for the growth of fin-tech industry and and enhancement of financial competitiveness of the nation


Eligible Companies

Companies running business in the following fields

- Mobile payment, mobile remittance, crowd funding

- Financial software platform

- Financial data analysis

- Mobile financial security, mobile certification


Eligible Credit Facilities

Working capital loand and fixed asset loan for fin-tech related businesses


Preferential Supports

Guarantee coverage ratio : 90%

Guarantee fee rate : 0.3%p deduction

Approval criteria relaxation : period of credit history check shortened from the past 1 year to 6 months


Good Job Guarantee Program View

Program Overview

Unemployment is the most serious problem in Korea, as the jobless growth has lasted for a long period of time. As a measure to tackle the problem, KOTEC introduced the 'Good Job Guarantee Program' to help SMEs increase job opportunities.


Eligible Companies

Those job-creating SMEs who satisfy the following requirements

- The number of full-time employees is increased by more than 20% year-on-year

- Completion of the following measures during the past one year: non-regular worker's transition into regular employee status, reemployment of career-stunted women, employment of the disabled, employment of the graduates from vocational high schools, or meister high schools

- Retainment of 30 or more full-time employees


Preferential Supports

Guarantee coverage ratio : 90~95%

Guarantee fee rate : 0.3~0.4%p deduction


Special Program for Job-Creating SMEs View

Program Overview

In order to offer special support for the job-creating efforts of the SMEs, KOTEC extends additional guarantee supports to help them cover the costs of hiring new workers.


Eligible Companies

Companies that have hired new employees within the past 6 months


Preferential Supports

Additional Guarantee Support : 30~50 million won per a new employee (up to 500 million won)

Guarantee ratio : 95%

Guarantee fee rate : pegged at 1.0%

Approval criteria relaxation : period of credit history check shortened from the past 1 year to 6 months


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