Ministry's PF Guarantees Boost Regional SMEs with Safe Repurchase Support

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Introduction to the New Financial Support Measures

The Ministry of Land, Infrastructure and Transport has introduced new financial support measures aimed at boosting the construction industry, particularly for small and medium-sized enterprises (SMEs). These initiatives include a special project financing (PF) guarantee program designed to provide much-needed liquidity and support to companies that previously struggled to meet traditional lending criteria.

Overview of the PF Special Guarantee Program

The PF special guarantee is specifically tailored to assist SMEs in the construction sector that are not among the top 100 in terms of construction capabilities. The program has been enhanced with revised evaluation criteria, which now place more emphasis on project feasibility rather than the contractor's overall ranking. This shift allows companies with lower rankings to qualify for financial support.

The evaluation process has seen a reduction in the weight given to the contractor’s evaluation score, from 35 to 30 points, while the weight of project feasibility has increased from 65 to 70 points. This change ensures that projects with strong potential are prioritized, even if the company behind them has a lower reputation in the industry.

In addition to adjusting the evaluation criteria, the program has expanded the list of eligible financial institutions. Savings banks have now been included alongside traditional banks, securities firms, insurance companies, and mutual finance institutions. This expansion recognizes the primary funding channels used by SMEs in the construction sector.

Initial Results and Success Stories

Since the launch of the PF special guarantee program, the Ministry has approved guarantees totaling 67.5 billion Korean won for five projects undertaken by SMEs. One notable success story involves Company A in Jeonbuk, which was previously unable to secure a PF loan due to its low construction ranking. Through this special guarantee, the company was able to obtain a 14 billion Korean won PF loan, marking a significant milestone.

Another example is Company B in Busan, which saw a 14% reduction in its guarantee fee after its project feasibility was recognized during the PF special guarantee review. These real-world examples highlight the positive impact of the program on smaller construction firms.

The ministry is currently reviewing two additional projects and aims to provide special guarantees totaling 2 trillion Korean won by 2027. This long-term goal underscores the government’s commitment to supporting the construction sector through targeted financial assistance.

Expansion of the "Safe Repurchase" Program

In addition to the PF special guarantee program, the "Safe Repurchase" initiative has also gained momentum. This program offers temporary low-interest loans, ranging between 3–4%, to regional projects facing challenges with unsold inventory and funding difficulties.

Following the first recruitment announcement on September 5, applications totaling 16.44 billion Korean won have been received. The ministry plans to complete the funding support within this year after conducting reviews in November. This initiative is expected to provide critical relief to struggling regional projects and help stabilize the housing market.

Government's Vision and Future Plans

Kim Heon-jeong, the Housing Policy Director at the Ministry of Land, Infrastructure and Transport, emphasized the importance of these programs in injecting over 1 trillion Korean won in liquidity into the market by the end of the year. He stated that the ministry will continue to gather feedback from the housing industry to actively support housing supply conditions.

By implementing these innovative financial support measures, the government is taking significant steps to ensure the sustainability and growth of the construction sector, particularly for SMEs that play a vital role in the economy.

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