Invest1 publisher2 min readPublished
Seoul stretches 5.5 billion won from Hana Bank and Naver into 68.75 billion won of merchant guarantees
Seoul Credit Guarantee Foundation will issue 68.75 billion won in special guarantees on a 5.5 billion won base from Hana Bank, Naver Pay and NAVER. Merchants in the six night-market alleys get higher limits from a pool that every small business in Seoul can also tap.
The Investor · Invest desk
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What happened
- Hana Bank is contributing 5 billion won and Naver Pay and NAVER 500 million won, which the foundation will use as the program's funding base.
- Six alleys were chosen, among them Sinsa Serosu-gil, the Konkuk University Food Street, the Sadang 1-dong restaurant alley and the Changdong Station district near Seoul Arena.
- Founders aged 39 or under at firms less than seven years old, and merchants who install Naver Pay Connect terminals, also qualify for preferential treatment.
- The city plans Moonlight Love Gift Certificates, tied to the Seoul Love Gift Certificate program, to steer visitor spending to alley merchants.
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Why it matters
- constraint Alley merchants draw on capacity shared with every Seoul small business, so the night-market preference raises their ceiling without assuring them any fixed portion of the pool.
- capability Naver Pay gets its terminal written into a public guarantee scheme, giving merchants a credit reason to install its hardware in exchange for a 500 million won contribution.
- cost Seoul's own outlay of up to 12 billion won buys lighting, CCTV and restrooms, so default losses on the guarantees land on a base funded by Hana Bank and Naver.
The foundation calls the 5.5 billion won the funding base for the program [2][3] and plans to write 68.75 billion won of guarantees against it [1]. That is 12.5 won of guarantee for every won contributed [1]. If the base were the only money absorbing defaults, losses of 8% of the guaranteed amount would use all of it [2].
The six alleys share that capacity with the city's other small merchants and with two other preferred groups [4][5][6]. The pool is also meant for projects "including" the night market, so the alleys are not its only purpose [1]. The foundation did not say how much of the 68.75 billion won is set aside for the six districts, or whether preferential treatment changes guarantee fees and interest rates as well as limits. On the record, the better terms for alley merchants are higher limits [4].
The Naver piece is cheap. Naver Pay and NAVER put in a tenth of what Hana Bank did, about 9% of the base [3]. Even so, their payment terminal is written into the eligibility rules [5]. A 500 million won contribution [2] attaches a credit preference to Naver Pay Connect hardware across a 68.75 billion won citywide pool [1].
Seoul's own money goes into the streets. Up to 2 billion won for each of six districts comes to at most 12 billion won through 2028 [8][4]. That is about 2.2 times the private funding base [5], and it pays for walkways, streetlights, CCTV, restrooms, waste sites, new signs and lighting [8]. Gift certificates are meant to push visitor spending toward alley merchants [9]. According to the foundation, the guarantee base comes from Hana Bank and Naver [2][3].
The program can go a few ways. In the version the city describes, the six alleys use their higher limits to pay for longer opening hours, which is the program's stated goal [10]. In a second version, merchants across Seoul draw most of the pool at standard limits, and the night market ends up as the name on a general guarantee program. The third version is about losses: defaults above 8% of guarantees would use up the base [2].
I think the second is the most likely, because six districts sit inside a pool open to every small merchant in the city [6][7]. The case against that is real. Higher limits could pull demand toward the one place where merchants have a new reason to borrow, which is staying open after dark. A foundation breakdown showing the six districts taking a large share of the 68.75 billion won would prove me wrong.
What to watch
- Whether the foundation publishes guarantee fees and interest terms for night-market merchants, showing whether preference means cheaper credit or only larger limits.
- Loss experience on the program, reported against the 5.5 billion won funding base.
- Rollout of the Moonlight Love Gift Certificates and how much visitor spending they route to merchants in the six alleys.