South Korea's government said Tuesday that it will provide 100 billion won ($87.6 million) in special credit guarantees to young entrepreneurs that are setting up new companies and hiring workers.

The plan made possible by the passage of the extra budget through parliament last month, is being pushed forward by the Ministry of SMEs and Startups, and aims to create good jobs by launching competitive venture businesses.

The ministry said business owners who are 39 years old and younger, and have hired workers within the last six months are eligible for the credit guarantee. Those that have launched a business within five years can also avail themselves to the program.

The system offers a good guarantee rate of 95 percent, which is 10 percentage points higher than conventional credit arrangements, with users being able to gain access to upwards to 50 million won worth of funds for use.

Loans taken out with the guarantee are subject to favorable interest rates that are lower than the market norm.

The various benefits can reduce the financial burden of startups and help them lay the foundation of growth, the ministry said. (Yonhap)