KaKakaoBank, South Korea’s leading mobile-only bank, said Sunday that it would join forces with industry partners to launch a credit scoring service specialized in mom-and-pop stores as a means to expand loans for low credit holders.

The lender will be a major shareholder in a new credit-scoring company, with a 33 percent stake. Korea Credit Data -- provider of Cash Note, business management software for small and medium-sized businesses that has 800,000 users -- will own 43 percent.

The Seoul Guarantee Insurance Company, KB Kookmin Bank, Hyundai Capital, Jeonbuk Bank and Welcome Savings Bank will be minor shareholders in the new company, tentatively named the Medium-Interest Innovation Corp.

The new company plans to develop credit scoring models for microbusinesses, including self-employed professionals and freelancers, based on financial and nonfinancial data from shareholders, and make them available to other financial companies.

On Friday the Medium-Interest Innovation Corp. applied to the financial authorities for preliminary permission to launch a new credit rating service. It is expected to become the first credit rating agency specialized in small businesses.

Currently, credit ratings for private business operators are based primarily on the owner’s personal credit information and do not take the business’s competitiveness into consideration. This results in high interest rates for microbusiness owners.

According to KakaoBank and Korea Credit Data, about half of all microbusinesses are classified as mid- or low-credit borrowers and must take out high-interest loans, with many paying more than 11 percent interest.

One of the main reasons that the government chose to allow internet-only banks was to expand the availability of loans for low- and mid-credit borrowers. KakaoBank and K bank, the country’s first two internet-only banks, and Toss Bank, which is scheduled to launch in September, all aim to broaden access to loans for thin credit filers.

“We decided to participate in the Medium-Interest Innovation Corp. because we believe that the capabilities and knowledge of the industry’s top shareholders can contribute to expanding financial inclusiveness for small businesses,” said Kim Kwang-ok, who is in charge of KakaoBank’s task force for the expansion of loans for low- and mid-credit borrowers.

KakaoBank plans to expand the proportion of its loans for low- and mid-credit borrowers to 30 percent of all borrowers by the end of 2023, from 10.2 percent as of the end of 2020.

Korea had 7.04 million microbusiness operators as of the end of 2019, according to the National Tax Service.