With raw material prices soaring in the aftermath of the war in Iran and the construction downturn prolonging, the Construction Guarantee Cooperative has opened a large-scale lending channel to ease its members' funding difficulties.
The Construction Guarantee Cooperative said Wednesday it will provide special loans totaling 300 billion won to member companies. The move aims to provide tangible financial relief to the construction industry, which is under liquidity pressure from the surge in raw material prices triggered by the blockade of the Strait of Hormuz and the overall contraction in the construction sector.
The applicable interest rate ranges from the late 2% to early 3% level annually, charged differentially according to credit ratings. The loan limit is 300,000 won per unit of contributed shares, with a maximum of 100 million won available per company. Applications can be processed online, reducing procedural burdens.
The cooperative explained that it eased application requirements so that small and medium-sized construction firms can also enjoy tangible benefits. "We focused on lowering the threshold for access so that members can receive sufficient support regardless of their size," a cooperative official said.
This special loan is an extension of the support measures the cooperative has maintained for the industry since last month. Starting last month, the cooperative temporarily cut payment guarantee fees for subcontracting payments and construction equipment rental costs by 10%, and fees for extending the terms of contract guarantees and construction performance guarantees by 30%. Following the fee reductions, which focused on lowering fixed-cost burdens at construction sites, the cooperative has now expanded the scope of support to direct liquidity provision.
"If last month's guarantee fee reduction was a prescription to relieve the fixed-cost burden at construction sites, this special loan will serve as genuine relief for members' operating funds, which have been depleted by high interest rates and a backlog of construction costs," a cooperative official stressed.
