Ministry of Culture, Sports and Tourism Provides Additional 50 Billion Won Support to Tourism Industry Affected by COVID-19

Officials affiliated with Uri Travel Cooperative holding a rally in Yeouido, Seoul, urging for livelihood measures such as financial support for the travel industry.

[Asia Economy Reporter Donghyun Choi] The Ministry of Culture, Sports and Tourism announced on the 1st that it will provide an additional 50 billion KRW this year to support tourism businesses facing management crises due to COVID-19.

The ministry will continue to support special loans with credit guarantees using the Tourism Promotion Development Fund for the travel and accommodation sectors this year, following last year. The special loan with credit guarantee is a system that provides necessary operating funds without collateral by offering credit guarantees from public institutions. Additionally, the repayment deferral for those who deferred loan repayments last year will be extended for another year.

Last year, the ministry secured an additional 95 billion KRW through consultations with financial authorities to meet the funding needs of tourism businesses affected by COVID-19 and fully executed financial support totaling 840 billion KRW.

In particular, a total of 102.5 billion KRW in special loans with credit guarantees was provided to 2,002 small-scale tourism businesses severely impacted by COVID-19. Among them, travel agencies accounted for 78.4% of the total supported cases (1,570 businesses) and 74.3% of the requested amount (approximately 76.2 billion KRW), indicating a high dependence on funding.

This year, the ministry will provide a total of 50 billion KRW in special loans with credit guarantees to small and medium-sized tourism businesses with weak collateral capacity. Compared to credit guarantee support before COVID-19, this special loan offers several benefits including an increased support limit by 150 million KRW, a preferential interest rate of 1%, a one-year extension of the repayment period, and a 0.3 percentage point reduction in guarantee insurance handling fees.

Tourism businesses wishing to receive the special loan can apply for credit guarantees at regional credit guarantee foundations’ branches (144 nationwide) starting from the 2nd, obtain a credit guarantee certificate, and then receive loans at NongHyup Bank branches (1,138 nationwide). Detailed information and conditions of the special loan can be found on the Ministry of Culture, Sports and Tourism’s website.

Earlier this year, the ministry deferred repayments totaling 100 billion KRW for one year for tourism businesses with upcoming loan repayment schedules. However, the industry has continuously requested an extension of the repayment deferral, citing unresolved management difficulties for those who deferred repayments last year. Accordingly, the ministry secured additional funds through the first supplementary budget on the 26th of last month and decided to extend the repayment deferral for those businesses by an additional 181.5 billion KRW. This establishes a foundation to reduce the financial burden on the tourism industry with a total of 281.5 billion KRW in deferrals this year.

Tourism businesses eligible for the repayment deferral extension can apply for deferral of repayment obligations at the banks from which they received tourism fund loans.

A policy official from the ministry stated, “By providing prompt and practical emergency financial support to affected tourism businesses, we hope the tourism industry struggling due to COVID-19 can recover management early and revitalize.”