LG Group has created a 200 billion won ($179 million) fund together with the Industrial Bank of Korea to help finance low-interest loans for up to 500 small and mid-sized suppliers, the Seoul-based company said Tuesday.

LG Electronics, LG Display, LG Chem and LG Household & Healthcare were the four LG affiliates that played a key role in creating the fund, in joint efforts with the local bank specializing in financing businesses here.

The fund will offer loans that will offer interest up to 2.4 percentage points lower than the average bank interest rate, LG said. 

Once the companies seeking the loans pass the deliberation screening, the funds will be granted within three days.

A growing number of conglomerates here have been stepping up their drive to seek mutual growth with their smaller partners and suppliers in line with the Park Geun-hye government’s initiative for reviving the small and mid-sized business sector.

For this, LG said it has expanded its existing 250 billion won “mutual growth sponsor ship fund” to 340 billion won. Combined with the new fund, the company is now operating funds of up to 540 billion won designed especially to help out the vendors.

LG said it hoped for the funds to reach the smallest vendors which frequently face difficulties in financing their businesses.

Further, the company has offered to give tips on energy-saving technology, free of charge, to these suppliers to help them enhance energy efficiency in their manufacturing procedures.

“We found out that many of these suppliers were suffering from rising energy costs due to the recent electricity price hikes, so we decided to share our know-how for reducing expenses,” LG officials said.

For the previously created 250 billion won fund that was launched in 2010, a total of eight affiliates had taken part. Three more affiliates including LG Hausys and LG CNS joined in to add another 90 billion won earlier this year.

By Kim Ji-hyun  (jemmie@heraldcorp.com)