Small Business Association: "Retroactive Application of Loss Compensation Is Justified... Interest-Free Loans Should Also Be Expanded"

Small Business Association Holds Press Conference... Urges Retroactive Application of Loss Compensation
"Constitution Guarantees Compensation for Losses Due to Public Authority Exercise; Urgent Expansion of Interest-Free Loans"

Kim Im-yong, Acting President of the Korea Federation of Micro Enterprise, held a press conference on the 15th at the Korea Federation of Micro Enterprise in Dongjak-gu, Seoul, emphasizing the need for retroactive application of loss compensation for small business owners.
[Photo by Korea Federation of Micro Enterprise]

[Asia Economy Reporter Junhyung Lee] "If business operations are prohibited by law, compensation should be provided by law."

Kim Im-yong, Acting President of the Korea Federation of Micro Enterprise, made this statement at a press conference held on the 15th at the Federation's office in Dongjak-gu, Seoul. Kim emphasized the necessity of retroactive application regarding the legislation on loss compensation for small business owners currently being discussed in the National Assembly.

Kim said, "Expectations among small business owners for the legislation on loss compensation are very high," and asserted, "Compensation for business losses should be applied retroactively." He added, "Article 23, Paragraph 3 of our Constitution stipulates that if losses occur due to the exercise of lawful public authority, compensation must be provided," and emphasized, "The spirit of the Constitution must be immediately realized in the COVID-19 situation."

Kim continued, "To achieve retroactive application of loss compensation, Representative Choi Seung-jae has been on a hunger strike, and first-term ruling party lawmakers have held press conferences, spreading awareness of the need for retroactive application within the National Assembly." He said, "Now is the time for these efforts to bear fruit," and added, "Both the government and local governments must step up to find solutions to save small business owners driven to the brink through expanding interest-free policy loans, guaranteeing business hours, and easing customer number restrictions."

He also mentioned the need to expand interest-free loan policies. Although there are low-interest loans with special guarantees from local governments, these funds are exhausted within days due to limited budgets. Kim pointed out, "Even existing borrowers and low-credit individuals are being rejected, raising concerns about the effectiveness," and stressed, "First, interest-free policy loans must be significantly expanded to help small business owners overcome the crisis and repay later, opening a lifeline for them."

Meanwhile, according to a survey conducted by the Federation from February 22 to 25 targeting 1,205 general small business owners, 84% responded that they want retroactive application of loss compensation. Regarding the government's differentiated support method for sales losses caused by its measures, such as business suspension and restrictions, 67.8% answered that businesses forced to close should be compensated 80% of their sales losses, and businesses with restrictions should be compensated 70%.

Additionally, among support policies for small business owners besides loss compensation, "Expansion of interest-free loan policies for small business owners" (39.3%) was the most frequently selected. This was followed by "Strong rent support policies such as direct rent subsidies" (29.1%) and "Reduction of direct tax rates such as VAT for affected small business owners" (27.7%).