Ministry of SMEs and Startups: "Daily Average of 171.7 Billion Won in Funding Application Consultations Amid COVID-19"

Funding Application Consultations from 13th to 27th
About 38,000 Cases, Approximately 1.89 Trillion Won
Among Them, 1,960 Cases and About 89 Billion Won in Loans or Guarantees Executed

Park Young-sun, Minister of SMEs and Startups, is discussing the current status and measures of policy support for small business owners and SMEs in response to COVID-19 at the Government Seoul Office on the 28th.

[Asia Economy Reporter Kim Daeseop] The Ministry of SMEs and Startups announced on the 28th that it has processed over 38,000 applications and consultations amounting to approximately 1.89 trillion KRW in response to the spread of the novel coronavirus infection (COVID-19).

The number of applications and consultations for COVID-19 response funds were tallied from the 13th to the 27th of this month. This averages 3,483 cases and 171.7 billion KRW per day. Among all applications and consultations, loans or guarantees worth 89 billion KRW (an average of 8.1 billion KRW per day) were executed across 1,960 cases (an average of 178 cases per day).

Park Young-sun, Minister of SMEs and Startups, stated at a briefing on 'Policy Support Measures for SMEs and Small Business Owners' held at the Government Seoul Office on the 28th, "Regarding financial support related to SMEs through COVID-19 response measures, we have conducted consultations worth about 200 billion KRW across 900 cases."

Minister Park added, "Among these, we received about 340 applications totaling approximately 100 billion KRW, which is nearly half of the amount, and supported a total of 93 cases with loans and guarantees amounting to 17.1 billion KRW."

By industry, consultations in the manufacturing sector, including automobile manufacturing, accounted for more than 40%. Of the 17.1 billion KRW supported, 56% was allocated to manufacturing. In terms of consultation numbers, travel and leisure followed manufacturing at 13.4%, then wholesale and retail at 8%.

Additionally, financial support for small business owners has involved a total of over 37,400 consultations amounting to approximately 1.67 trillion KRW. Among these, loans and guarantees were provided for about 1,800 cases totaling 72 billion KRW. The food service sector received the most consultations and support, accounting for about 38%. Wholesale and retail, as well as travel and transportation, followed with 28% and 10%, respectively.

Minister Park Young-sun of the Ministry of SMEs and Startups is speaking on the 28th at the Government Seoul Office about the current status and measures of policy support for small business owners and SMEs in response to COVID-19.

Minister Park stated, "Regarding the extension of maturity for existing loans and guarantees, we supported extensions for 97 cases totaling 20.7 billion KRW," and added, "For 68 loan cases requesting short-term principal repayment deferrals, we also implemented repayment deferral measures."

For small business owners, maturity extensions have been supported for over 8,600 cases amounting to approximately 190 billion KRW. The demand for funds from small business owners was about 14 times higher than the initially planned 120 billion KRW, far exceeding expectations.

The Ministry of SMEs and Startups plans to continue actively providing rapid financial support. While demand for funds on the ground continues, additional financial support measures have also been prepared.

Minister Park said, "Due to the overwhelming demand, there are physical limitations such as manpower and time invested in consultations, which inevitably causes the process to be slower for small businesses compared to SMEs. Considering this, the Ministry is dispatching additional personnel to regional credit guarantee foundations nationwide and simplifying on-site inspections."

Generally, small business owners are understood to be those with fewer than 5 regular employees in wholesale, retail, and food service sectors, and fewer than 10 in manufacturing. SMEs can utilize the Small and Medium Business Corporation and the Korea Technology Finance Corporation, while small business owners can use the Small Enterprise and Market Service or local regional credit guarantee foundations.

Regarding the Small and Medium Business Corporation's emergency management stabilization funds, the scope of support has been expanded to include all industries affected by COVID-19, such as small hospitals and clinics, movie theaters, franchise businesses, performance-related industries, wedding businesses, restaurants with 5 or more regular employees, and education service industries. The interest rate for emergency management stabilization funds is 2.15%, with a loan period of 5 years including a 2-year grace period. Support is available up to 1.5 billion KRW per company. Entrance exam academies and tutoring academies are excluded from support.

Affected SMEs can visit the Small and Medium Business Corporation website to schedule a consultation date and then visit the consultation window with a self-diagnosis report, ID, and business registration certificate on the designated date or receive consultation by phone. After consultation, staff from the corporation will visit the business site to assess the damage and evaluate technology and business feasibility.

Minister Park explained, "If you want to apply for funds prepared by the Ministry of SMEs and Startups, first confirm whether you are a small business owner or an SME, and then find the appropriate policy financial institution accordingly."

Guarantee support from the Korea Technology Finance Corporation involves applying for a guarantee via their website or branch office, undergoing technical evaluation and guarantee screening, receiving a guarantee certificate, and then obtaining a loan from a bank. Eligible businesses include those engaged in tourism, accommodation, performance, exhibitions, hospitals and clinics, education services, or companies confirmed to have suffered damage as exporters or importers to China. Support is capped at 300 million KRW per company, with a fixed guarantee fee of 1.0% to reduce the burden on affected companies.

For the Small Enterprise and Market Service's management difficulty funds, eligible recipients include small business owners in food and accommodation, wholesale and retail, transportation, leisure and travel, education services, and others recognized by the service as affected. Applicants must prepare documents verifying sales and business registration, such as business registration certificates and national and local tax payment certificates, and obtain a policy fund confirmation certificate through the Small Business Support Center.

After receiving the policy fund confirmation certificate, applicants can visit the nearest regional credit guarantee foundation to obtain a guarantee certificate or directly visit a financial institution to apply for a loan. The loan interest rate is 1.5%, with support up to 70 million KRW per company and repayment possible in installments within 5 years.

For those wishing to use the special guarantee from the 16 regional credit guarantee foundations nationwide, eligible recipients are small business owners affected by COVID-19. Even low credit ratings from 7 to 10, which are usually difficult to support, are eligible. Applicants prepare documents such as application forms and copies of lease contracts and submit them to the regional credit guarantee foundation. After guarantee screening and issuance of the guarantee certificate, they can visit a nearby commercial bank to receive a loan. Support is up to 70 million KRW per company, with a guarantee fee 0.2 percentage points lower than general guarantees at 0.8%, and support available for up to 5 years.

Minister Park said, "Due to the spread of COVID-19, many small business owners and SMEs are facing difficult situations. Small business owners and SMEs who create business opportunities despite challenging domestic and international environments are the hope of our economy, and the Ministry of SMEs and Startups will be the wind that nurtures the spark of hope."