To Receive Support for SMEs Damaged by Heavy Rain... Bring a 'Disaster Confirmation Certificate'

Ministry of SMEs Establishes and Operates 'General Support Team'
Policy Funds Support Up to 1 Billion KRW per Affected SME
Guarantee Amount Increased Up to 200 Million KRW for Small Business Owners

Roads and other areas are submerged due to continuous heavy rain and dam discharge (Photo by Kim Hyunmin).

[Asia Economy Reporter Kim Daeseop] Heavy rains during the monsoon season have caused significant damage due to road and farmland flooding as well as landslides. Damage to houses, factories, and facilities is also continuing.

Taeseong Steel, a small and medium-sized enterprise located in Eumseong, Chungbuk, is estimated to have suffered about 700 million KRW in damages after soil from a nearby landslide covered part of its factory. With heavy rain warnings in effect in many areas and Typhoon No. 5 Jangmi moving northward, tension is rising over the possibility of even greater damage nationwide.

According to the government on the 9th, several areas including Eumseong-gun in Chungbuk and Cheorwon-gun in Gangwon, which suffered flood damage, have been declared special disaster zones, and support for damage recovery for SMEs and small business owners is being swiftly implemented. The Ministry of SMEs and Startups has established and is operating a 'Comprehensive Support Team' composed of local SME office staff and related agency personnel at regional SME offices to provide rapid assistance to affected companies.

Additionally, 'Dedicated Support Centers' have been set up and are operating at the regional headquarters (centers) of the Korea SMEs and Startups Agency, the Small Enterprise and Market Service, the Korea Technology Finance Corporation, and the Korea Credit Guarantee Fund. These centers assist with damage reporting and verification, preparation of funding application documents, and counseling on policy fund support programs.

For SMEs, the plan is to ease the burden on affected companies by increasing the special guarantee ratio (from 85% to 90%) and offering preferential guarantee fees (from 0.5% to 0.1%, applying fixed guarantee fee rates). The guarantee limit will also be increased from the existing 300 million KRW for working and facility funds to 500 million KRW for working capital and facility funds within the required amount. Guarantees due for maturity will be fully extended.

Moreover, policy funds for SMEs will be provided up to 1 billion KRW per affected company at an interest rate of 1.9%. When executing SME loans, the 'On-site Emergency Support Expert Ambulance Man System' will be utilized to ensure rapid fund disbursement within seven business days by dedicated staff.

Preferential financial support measures will also be implemented for small business owners. Special guarantees for small business owners will see an increase in the guarantee ratio (from 85% to 100%) and preferential guarantee fees (from 0.5% to 0.1%, applying fixed guarantee fee rates). The guarantee amount will be expanded up to a maximum of 200 million KRW on top of existing guarantee amounts to facilitate swift damage recovery.

Small business policy funds (emergency management stabilization funds) will benefit from reduced loan interest rates (from 2.0% to 1.5%) and extended repayment periods (from 2 years grace and 3 years repayment to 3 years grace and 4 years repayment). Support will also be extended to some industries previously excluded from policy fund loans, such as healthcare and veterinary services, thereby expanding the scope of loan recipients.

An official from the Ministry of SMEs and Startups stated, "For detailed inquiries regarding damage reporting and fund support, you can contact the Ministry’s integrated call center or the dedicated support centers established at each regional SME office and related agencies for comprehensive guidance."

Kim Hak-do, President of the Small and Medium Business Corporation (center), is talking with officials during a visit to the flood recovery site of the small business 'Taeseong Steel' located in Eumseong, Chungbuk, on the 7th.

Companies wishing to apply for special guarantees or loans should report the damage to their city, county, or district office (or eup, myeon, dong) and obtain a disaster confirmation certificate from the local government, which must be submitted to the loan or guarantee institution to receive financial support for damage recovery.

SMEs can apply for disaster funds (up to 1 billion KRW per company, 1.9% interest rate, 2 years grace, 3 years repayment) through the Korea SMEs and Startups Agency with the disaster confirmation certificate to receive loan support, or apply for special guarantees through the Korea Technology Finance Corporation (or Korea Credit Guarantee Fund) to receive funding. The loan limit at commercial banks is within the guarantee limit, and interest rates and repayment conditions are subject to each bank’s regulations.

If small business owners require guarantees, they should obtain a disaster SME (small business owner) confirmation certificate from the local government, then visit the regional credit guarantee foundation to apply for and receive a special guarantee certificate, and apply for a loan at a bank to receive funding (up to 200 million KRW per company, 0.1% guarantee fee).

On-site inspections of flood-damaged areas are also ongoing. On the 7th, Kim Hak-do, Chairman of the Korea SMEs and Startups Agency, visited small and medium-sized enterprises affected by the heavy rains in the Chungcheong region and pledged support for rapid damage recovery and business normalization. The agency is operating an emergency support system and a disaster support task force in cooperation with the Ministry of SMEs and Startups and related organizations.

Chairman Kim Hak-do said, "It is important to prevent secondary damage in preparation for continued heavy rains and typhoons. The Korea SMEs and Startups Agency will actively utilize the Ambulance Man and Fast Track systems to promptly provide funds for damage recovery." He added, "We will support early business normalization through multifaceted assistance."