Korea Federation of Small and Medium Enterprises, Korea Electric Power Corporation (KEPCO), and Korea Credit Bureau (KCB) announced on the 9th that they developed an alternative credit evaluation model for financially vulnerable small business owners and held a service partnership agreement ceremony for inclusive financial support for small business owners at the Small and Medium Enterprises Hall in Yeouido.
The ceremony was attended by 20 people, including Kim Ki-moon, president of the Korea Federation of Small and Medium Enterprises; Kim Dong-cheol, president of Korea Electric Power Corporation; and Hwang Jong-seob, president of KCB. The institutions agreed to utilize the data they possess to create a financial support environment for small business owners who have been left in the blind spots of the existing credit evaluation system.
The three institutions also signed an agreement in August last year to develop a credit evaluation system and policy indicators for financial support for small and micro business owners. They successfully developed an alternative credit evaluation model by combining and analyzing the data related to small business owners that each institution possesses.
The new evaluation model assesses the creditworthiness of small business owners by combining alternative credit information held by KBIZ and KEPCO, such as the ▲duration of membership in the yellow umbrella policy ▲contribution amount to the policy fund ▲electricity usage ▲electricity bill payment information, along with ▲credit information of businesses held by KCB. It differs from the existing model, which is centered on financial evaluation.
In particular, this evaluation model is expected to improve the credit ratings of about 2.18 million small business owners, as it enhances the discriminatory power for low to medium credit individuals (those rated 4 or below).
Kim Ki-moon, president of the Korea Federation of Small and Medium Enterprises, noted, “This alternative credit evaluation model will actively utilize the data possessed by the three companies to enhance the accessibility for financially vulnerable groups and significantly help reduce the interest burden on small business owners.”
Kim Dong-cheol, president of KEPCO, mentioned, “We will continue to expand various collaborations using the vast public data that KEPCO possesses to contribute to the recovery of the civilian economy.”
Hwang Jong-seob, president of KCB, explained, “This alternative credit evaluation model employs differentiated data and methodologies that overcome the limitations of traditional transaction-based evaluations and will provide a fair evaluation opportunity to small and micro business owners who have been marginalized in the existing credit evaluation system.”
Meanwhile, the three institutions plan to promote various cooperative projects, such as 'data-based joint research' for the development of policies for small and micro enterprises.