[Q&A] When and How Much Will Small Business Owners Receive the 'Hope Recovery Fund'?

From August 16 Last Year to June 30 This Year, 1.78 Million Affected Small Business Owners Targeted
Loss Compensation for July-September This Year to Start from Late October
6 Trillion Won Emergency Loans for Specially Affected Industries and Low-to-Medium Credit Small Business Owners
Up to 20 Million Won Loan for Rent of Businesses Under Gathering Ban, Operation Restrictions, and Management Crisis

A public official from Seongnam City, Gyeonggi Province, is posting a business suspension administrative order at a karaoke room in Seongnam City. Photo by Yonhap News

[Asia Economy Reporter Kim Heeyoon] The government announced on the 25th that it will begin distributing the 5th disaster relief fund for small business owners, called the 'Hope Recovery Fund,' starting from the 17th of next month.

Eligible small business owners will receive between 1 million and 20 million KRW depending on the level of quarantine measures, duration of the measures, and business size. Businesses in crisis sectors with a 10-20% decrease in sales will receive a flat amount of 500,000 KRW.

The Ministry of SMEs and Startups secured 6.193 trillion KRW in the second supplementary budget passed by the National Assembly, which is an increase of 1.3554 trillion KRW compared to the original government proposal of 4.8376 trillion KRW.

The main contents of the second supplementary budget, including the Hope Recovery Fund promoted by the Ministry of SMEs and Startups, are as follows.

- What is the scale of the Hope Recovery Fund payments?

▲ Support types and amounts have been detailed by reflecting each business's damage information such as quarantine level (closure ban, business restriction, crisis sector), quarantine period (long-term, short-term), and business size (annual sales of 400 million KRW, 200 million KRW, 80 million KRW). Closure ban sectors will receive between 3 million and 20 million KRW, business restriction sectors between 2 million and 9 million KRW, and crisis sectors with sales decline of 10% or more will receive between 500,000 and 4 million KRW.

- When will the Hope Recovery Fund be paid?

▲ Considering the prolonged COVID-19 pandemic and the recent strengthening of social distancing measures, payments are planned to start from the 17th of next month. Priority payments will be made to 1.3 million people, which is 73% of the total 1.78 million eligible recipients, with the remainder paid from the end of next month.

- How are the detailed payment criteria for each quarantine measure calculated?

▲ Small business owners who suffered significant damage due to COVID-19 quarantine measures over 46 weeks from August 16 last year to June 30 this year are eligible. Those who were subject to closure bans or business restrictions even once during this period, or small business owners in crisis sectors with significant sales declines, can receive support.

- Will compensation be provided for losses due to the elevation to Level 4 social distancing in the metropolitan area?

▲ Once the revised Small Business Support Act is implemented on October 8, a Loss Compensation Deliberation Committee will be convened promptly to finalize specific compensation calculation criteria and payment methods. Detailed guidelines will be announced in mid-October, and compensation applications will be accepted. Customized compensation amounts based on loss scale are expected to be paid from the end of October.

- How much budget has been allocated for loss compensation?

▲ For compensation of losses from July to September, considering the recent elevation of social distancing levels, the National Assembly review process increased the budget by 403.4 billion KRW, finalizing at 1.0263 trillion KRW.

- Has a loan budget been allocated for small business owners with medium to low credit?

▲ Emergency fund loans worth 6 trillion KRW will be supplied next month for special damage sectors and small business owners with medium to low credit. Loans up to 10 million KRW at an annual interest rate of 1.5% will be provided to low-credit small business owners in closure ban, business restriction, and crisis sectors, with a total support scale of 1.2 trillion KRW.

- What is the scale of rent support for small business owners?

▲ Rent support will be provided up to 20 million KRW per person for small business owners in closure ban, business restriction, and crisis sectors. The guarantee fee rate required for rent loans from commercial banks for business restriction and crisis sectors will be reduced. Previously, it was 0% for the first year and 0.6% for years 2 to 5; going forward, it will be 0% for years 1 to 2 and 0.4% for years 3 to 5.

- How will small business closure support be conducted?

▲ The small business closure support fund, which provides 500,000 KRW, was scheduled to end next month but has been extended until the end of the year with this supplementary budget. Additionally, a one-stop support project covering debt adjustment, consulting, and demolition costs to alleviate closure expenses will be implemented starting from the 2nd of next month.