Minister Park Young-sun of the Ministry of SMEs and Startups is discussing policy support measures for small business owners and SMEs in response to COVID-19 at the Government Seoul Office Building on the 28th.
[Asia Economy Reporter Kim Daeseop] The Ministry of SMEs and Startups is expanding policy funds for small business owners and SMEs to 3.15 trillion KRW to reduce the damage caused by the spread of the novel coronavirus infection (COVID-19). It also plans to increase supply to stabilize the supply of masks and hand sanitizers.
According to the joint announcement by related ministries at the 'Comprehensive Measures for Minimizing the Impact of COVID-19 and Early Overcoming of Livelihood and Economy' held at the Government Seoul Office on the 28th, a total of 3.15 trillion KRW in funds will be provided, including an additional 2.9 trillion KRW on top of the initial 250 billion KRW of newly supported policy funds for small business owners and SMEs struggling due to COVID-19.
Minister Park Young-sun of the Ministry of SMEs and Startups said at the briefing, "As always, those who suffer the most in national crises are small business owners and SMEs," adding, "We plan to secure 1.68 trillion KRW for the second phase through changes in fund operation plans and 1.22 trillion KRW for the third phase through additional supplementary budgets the government is preparing."
As the number of confirmed COVID-19 cases increases, demand for small business management stabilization funds is surging. Initially, 20 billion KRW was allocated for the first phase of management stabilization funds, but the daily average application amount has reached 113.4 billion KRW. From the 13th to the 27th, there were 24,206 applications totaling 1.2478 trillion KRW.
To respond to this demand and provide rapid funding support, the small business management stabilization fund will be expanded from 20 billion KRW in the first phase to 500 billion KRW in the second phase through fund changes. Furthermore, if the third phase supplementary budget (government proposal) of 920 billion KRW passes the National Assembly, the total will increase to 1.42 trillion KRW. The loan interest rate for small business management stabilization funds will also be lowered by an additional 0.25 percentage points from the current 1.75% to 1.5%.
Special guarantees by regional credit guarantee foundations for small business support will be expanded tenfold from the original 100 billion KRW to a total of 1 trillion KRW.
Park Young-sun, Minister of SMEs and Startups, is discussing policy support measures for small business owners and SMEs in response to COVID-19 at the Government Seoul Office on the 28th.
Minister Park said, "The central government's re-guarantee ratio to alleviate the burden on regional credit guarantee foundations has been increased from 50% to 60%," adding, "Especially for Daegu and Gyeongbuk, which have been severely affected by COVID-19, the regional credit guarantee limit (2 billion KRW) has been abolished to allow support regardless of existing guarantees by regional foundations."
The Ministry of SMEs and Startups will improve procedures reflecting field voices that policy fund applications take a long time and require visits to multiple institutions. Starting from the 6th of next month, an online issuance system for the 'Policy Fund Confirmation Certificate' at small business support centers will be introduced, enabling issuance of guarantee certificates without visiting the support center.
Additionally, during regional credit guarantee reviews, on-site inspections can be omitted for 75% of total cases based on business duration and credit rating.
Minister Park said, "To support the insufficient manpower of regional credit guarantee foundations, 72 personnel from the Ministry of SMEs and Startups' local offices and policy financial institutions will be dispatched, and the Small Enterprise and Market Service will also deploy an additional 124 personnel to ensure smooth fund support operations."
To facilitate smooth financing for SMEs, the scale and target of policy funds will be expanded, and support methods diversified. The emergency management stabilization fund budget will be expanded to 25 billion KRW in the first phase, 300 billion KRW in the second phase, and 300 billion KRW in the third phase (totaling 600 billion KRW), and the support limit will be increased from the existing 1 billion KRW to 1.5 billion KRW.
Minister Park emphasized, "We will separately allocate 120 billion KRW for SMEs in the Daegu and Gyeongbuk regions, which are expected to face significant difficulties due to COVID-19."
Minister Park Young-sun of the Ministry of SMEs and Startups is discussing policy support measures for small business owners and SMEs in response to COVID-19 at the Government Seoul Office on the 28th.
Repayment will be deferred and maturity extended without requiring proof of sales decline for all companies experiencing short-term liquidity shortages. The scale of trade credit insurance has been expanded from 2 trillion KRW to 2.2 trillion KRW to reduce risks such as customer defaults in credit transactions. Insurance premiums will be reduced by 10%, and cooperation with local governments supporting 50% of insurance premiums for SMEs within their jurisdiction will be expanded.
Financial support for affected companies will also be expanded by utilizing corporate networks in the financial sector. Minister Park said, "KB Kookmin Bank will expand the scale of its food service specialized financial products from 45 billion KRW to 90 billion KRW, and Woori Bank will double the scale of its specialized financial products supporting women-owned businesses from 10 billion KRW to 20 billion KRW."
The Ministry of SMEs and Startups has been operating an emergency response team since the 28th of last month regarding the COVID-19 situation. It is expanding policy fund support for small business owners and SMEs struggling due to COVID-19. To diversify export routes for SMEs, export vouchers are being provided to companies affected by exports to China.
For small business owners and traditional markets, campaigns for masks and other quarantine supplies, kind landlords, kind mask factories, and kind hand sanitizer factories are being promoted. Active mask supply is underway through Public Home Shopping and the Small Enterprise and Market Service. Starting from the 2nd of next month, masks will also be sold at the Brand K corner in the SME Premium Maru Stores at Seoul Station, Daejeon Station, and Gwangju Station.
Minister Park said, "As the number of confirmed COVID-19 cases has recently increased, the impact on domestic demand, exports, and production has become visible, intensifying difficulties for small business owners and SMEs," adding, "The Ministry of SMEs and Startups will be the wind that fans the flames of hope."
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