Even with a low credit score, growth potential will be reflected to lower the lending barrier
Specialized credit evaluation for small business owners reflects sales and commercial district conditions to lower the lending barrier. Even thin-file borrowers can increase their approval chances based on growth potential, broadening their opportunities to secure funding.
The financial sector is introducing specialized credit evaluations that reflect small business owners’ future growth potential, improving financing conditions for small business owners who previously had difficulty obtaining loans based on their existing credit scores alone.
According to a report by Kyunghyang Shinmun, cases are emerging in which even “thin filers” with limited financial history, such as coffee shop and Korean restaurant operators, are being approved for loans through evaluations that use nonfinancial information such as sales growth, the growth potential of the local commercial district, and business sustainability.
The Financial Services Commission announced that it plans to add eight more banks by the end of the year to the pilot operation of the small business specialized credit evaluation (SCB), which currently has eight banks participating. SCB calculates a growth credit rating based on nonfinancial information such as sales, industry type, commercial district, customer response, and repeat visitation trends, and reflects it in loan limits and interest rate conditions. The FSC plans to pursue expansion to the entire banking sector and related institutional improvements based on performance through the second half of next year.