Special Management Safety Fund Established for SMEs and Small Business Owners
Significant Support for Small Manufacturing, Service Industries, and Small Business Owners to Enhance On-site Impact
Breaking from Past Practices, Expanding Loan Limits an
[Asia Economy Yeongnam Reporting Headquarters, Reporter Kim Yong-woo] Busan City has made a decisive decision to implement the ‘Policy Fund Phase 2 Measures’ to support small and medium-sized enterprises (SMEs) and small business owners who are struggling due to strengthened social distancing measures.
Before implementing these measures, Busan City held a daily emergency economic countermeasure meeting led by Deputy Mayor for Economic Affairs Park Seong-hoon starting September 1, where various discussions took place.
In particular, the major funding-related requests from companies gathered during the industry-specific field meetings chaired by the Deputy Mayor for Economic Affairs in June and July were incorporated into the Policy Fund Phase 2 Measures, enhancing the policy’s on-site impact.
At the early stage of the COVID-19 crisis, Busan City established a 700 billion KRW policy fund and implemented Phase 1 policy fund operations to strengthen support for small business owners and micro-entrepreneurs.
The Phase 1 policy fund operations included ▲Busan Moduron, the nation’s first inclusive finance fund (100 billion KRW) ▲Special funds for COVID-19 affected companies (100 billion KRW) ▲Small business management stabilization funds (50 billion KRW) ▲Special rent funds for small business owners affected by COVID-19 (50 billion KRW) ▲Special funds for small business owners (400 billion KRW), which helped stabilize the livelihoods of small business owners and micro-entrepreneurs affected by COVID-19.
However, as economic activities across society have contracted due to strengthened social distancing measures amid the resurgence of COVID-19, Busan City has further strengthened support for existing small business owners and micro-entrepreneurs. Additionally, the scope has been expanded to include small and medium-sized manufacturing and service industries, leading to the decisive implementation of the Phase 2 policy fund.
First, financial support for small and medium-sized manufacturing and service industries will be strengthened by offering ultra-low interest rates in the 0% range, expanding loan limits on existing loans, and allowing overlapping support.
To this end, Busan City will establish a special management stabilization fund of 150 billion KRW. This will be operated mainly through a two-track system.
▲Track 1 provides up to 200 million KRW in support for SMEs and small business owners engaged in manufacturing ▲Track 2 offers loans up to 100 million KRW for SMEs and small business owners in non-manufacturing sectors (including service industries).
This significantly increases the maximum loan limit compared to the 70 million KRW maximum loan limit for COVID-19 affected small business management stabilization funds supported by the Small Enterprise and Market Service in the first half of the year.
Moreover, under both tracks, even if SMEs have already received support for business promotion and operating funds, overlapping support is possible within a total guarantee limit of 800 million KRW. Additionally, Busan City will support 2% of the loan interest for two years, effectively applying a 0% range loan interest rate from the company’s perspective.
Second, the scale of operating funds for SMEs will be expanded to flexibly respond to the actual funding demand in the field.
Due to the impact of COVID-19, applications for facility funds for SMEs have been sluggish due to decreased new investments, but demand for operating funds, which directly help business management, continues to increase. Reflecting the actual demand of companies, the scale between policy funds has been adjusted.
The operating funds for SMEs will be expanded from the existing 230 billion KRW by an additional 80 billion KRW to a total of 310 billion KRW to minimize gaps in policy funding.
Busan City expects that more companies will benefit from operating fund support through this measure.
Third, existing loan conditions will be eased, and funding support for startup companies will be expanded to protect the foundation for future growth.
The easing of existing loan conditions reflects requests from companies during the field meetings with automobile parts companies, changing the special guarantee for automobile parts companies from ‘no re-loan within the limit’ to ‘additional loans possible within the limit.’
This decision is expected to partially alleviate the financial difficulties of Busan’s core automobile parts industry, which is facing a crisis due to COVID-19.
Furthermore, to protect the foundation for future growth even after COVID-19, the scope of existing startup special funds will be expanded to provide more startup companies with loan support opportunities. This is also included in the Phase 2 policy fund operation measures to protect the startup foundation.
Byun Sung-wan, Acting Mayor of Busan, said, “We have urgently prepared the second phase of policy fund support to minimize additional damage to SMEs and small business owners as much as possible,” adding, “We are also devising additional measures for companies with promising growth potential but facing temporary liquidity crises due to COVID-19.”
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