Sunshine Loan: A Bright Opportunity for Low Income Earners


Sunshine Loan: A bright opportunity for low income earners


          The global financial crisis has left many governments around the world with fiscal debt and also severely hit households, particularly  low income earners with growing debt burden. Some of the financial institutions focused more on speculative investments such as project financing and equity investment so far rather than risking by dealing with low income earners. As a result, low income families in Korea heavily rely on private money lenders paying as high interest rate as 44%. On the other hand, the banks started raising interest rate on loans and mortgages due to fears of growing debt.

          The Financial Services Commission (FSC) along with financial institutions*, launched the Sunshine Loan program, which literally means ‘finance like warm sunshine to low income households’.

* The National Credit Union Federation of Korea, the National Agricultural Cooperative Federation, the National Federation of Fisheries Cooperative, the Korean Federation of Community Credit Cooperatives, and mutual savings banks.

A press briefing on the Sunshine Loan by the vice chairman of the FSC, Kwon Hyouk-Se

          On July 20th, there was a press briefing on the Sunshine Loan by the vice chairman of the FSC, Kwon Hyouk-Se. The FSC’s goal was to provide the low-income households with a financial service that can ease their high interest burden from private lending companies and to maximize the number of eligible people to take advantage of the government’s financial services.

          About 10 trillion Korean Won (KRW) will be extended over next 5 years through this program. It is expected to reduce the interest payment burden by 6 trillion KRW over the next 10 years. Interest rates will be differentiated between financial institutions but will be between 10% to 13%. This is significantly low rate considering people with bad credit rating can only get loans from private money lenders with +40% interest.

The differences between the Sunshine Loan and the Smile Microcredit Bank

          People might wonder how the newly-launched Sunshine program differs from the Smile microcredit loan program the FSC already launched last year. The Smile microcredit program is a non-profit loan offered by the Smile microcredit financial foundations . On the other hand, the Sunshine loan is the loan that can be productized by financial institutions following specific guidelines. The purposes loans are quite different between the programs and interest rate would be different as well. Moreover, the eligibility for an individual to get the Sunshine loan is much easier and requires less conditions compared to the Smile microcredit loan. It is expected to provide financial services to much wider range of people. The differences between the Sunshine Loan and the Smile Microcredit Bank.

          In the long term, approximately 17 million people would be potential beneficiaries from the Sunshine loans assuming that the Sunshine loans can cover all those who cannot get microcredit loans or any other loans. The Sunshine Loan can be a bright opportunity for low income households.


5 thoughts on “Sunshine Loan: A Bright Opportunity for Low Income Earners

    • Rina


      Thank you for your attention to my post.
      Unfortunately this loan is operated in South Korea since it is a government-backed loan.

  1. Improve Your Credit Score

    One thing to improve your credit score is to maintain your credit report. Make sure all the minimum payments of your credit getting paid on time for at least last 12 months. If you are planning to buy new home in the future, please don’t take new loans for it as because it will harm you credit score rating. You can continue your fist loans by adding up your amount of credit and set the monthly payment at affordable cost. This will boost your credit score in the future as long as you can maintain your monthly payment on time.

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