The Government Pays Part of Your Small-Business Loan Interest. Most People Who Qualify Have Never Heard of KUR
5 min read
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5 min read
You run a small food stall, a laundry or an online shop. You need Rp100.000.000 for equipment. The bank quotes a rate that makes your stomach drop. Then a friend says, "Ask about KUR."
KUR (Kredit Usaha Rakyat, "People's Business Credit") is a government-backed loan for small and micro businesses. The state pays part of the interest cost so the rate you pay is lower. Many owners who could use it have never asked about it.
This post explains what KUR is, what the 6% rate really costs, and one trap that changes the math: flat versus effective interest.
A normal bank sees a small business as risky. So it charges a higher rate and often asks for collateral (an asset, like a house, that the bank can take if you stop paying).
KUR changes that. The government subsidizes the interest, and a guarantee scheme backs the loan. Banks such as BRI, Mandiri and BNI hand out the money. You apply at the bank, not at a government office.
The rules are set each year. For 2026, the guideline is Peraturan Menteri Koordinator Bidang Perekonomian No. 1 Tahun 2026, according to a summary on Veritask.
Here is what the press reported after the KUR policy committee met on 17 November 2025:
Detik also reported that the top ceiling rose to Rp1 miliar. Banks apply their own limits by KUR type, so check which one you fit.
Two loans can both say "6%" and cost very different amounts.
Let's use real numbers. Borrow Rp100.000.000 for 36 months. These are my own calculations, not a bank quote:
| Loan type | Monthly payment | Total interest paid |
|---|---|---|
| 6% effective per year | Rp3.042.194 | Rp9.518.975 |
| 6% flat per year | Rp3.277.778 | Rp18.000.000 |
| 8% effective per year | Rp3.133.637 | Rp12.810.916 |
The 6% effective figure matches the Rp3.042.194 monthly payment that Bisnis and other outlets publish in their KUR BRI tables.
Now look at the flat row. A "6% flat" loan over 36 months is equal to an effective rate of about 11.1% a year. That is higher than the 8% loan. The label looks cheap. The cost is not.
OJK data reported by the press put the average working-capital loan rate at 8,00% in May 2026 (IDX Channel and others, via search summary). That is an average across all borrowers, mostly bigger firms with collateral.
A small business with no track record often pays more. A rate of 6% effective is below that average. On Rp100 juta over 36 months, the gap to 8% is about Rp3,3 juta of interest.
That is real money. But it is not the only thing to weigh. KUR can also come with a longer approval process and rules about how you use the money.
Banks list similar basics. According to Bisnis' KUR BRI guide:
Rules change by year and by bank. Confirm with the branch before you go.
Cheap debt tempts people to borrow more than the business needs. Do not do that. Borrowed money still has to be paid back, even if sales are slow.
Two checks help:
Before you sign, write down your total interest in rupiah, not the percentage label. Then look at what your current savings and investments earn. Open your NetWort Dashboard to see your portfolio's IRR (the yearly return that accounts for when money went in), and compare it with what the loan costs you.