Ministry of SMEs and Startups Expands Support Targets for 'Special Guarantee for Medium and Low Credit Small Business Owners'

[Asia Economy Reporter Junhyung Lee] The Ministry of SMEs and Startups announced on the 19th that it will revamp the 'Special Guarantee for Medium and Low Credit Small Business Owners,' which has been in effect since last month to support small business owners with medium and low credit whose sales have declined.

The Special Guarantee for Medium and Low Credit Small Business Owners is a special guarantee program provided through regional credit guarantee foundations to support small business owners struggling due to the impact of COVID-19. It offers support up to 20 million KRW for five years. In the first year, the guarantee fee is waived, and from the second to fifth year, a low guarantee fee of 0.6% is applied. An interest rate of around 2.6% is also provided. Since its implementation last month, emergency funds totaling 92 billion KRW have been supplied to 5,669 companies in about a month.

However, difficulties have continuously arisen in the field where small business owners who did not meet the eligibility criteria could not receive support. Accordingly, the Ministry of SMEs and Startups reviewed the special guarantee program overall and announced improvements such as ▲expanding the eligibility criteria ▲increasing the total guarantee limit per business.

Specifically, the criteria for confirming eligibility will be expanded. Previously, only small business owners in general industries who experienced a decline in sales and received 1 million KRW from the 4th disaster relief fund, the Buttimmok Plus Fund, could apply for the special guarantee. Simplified taxpayers could not verify semiannual sales decline, causing some small business owners to be unable to apply for the special guarantee. To resolve this issue, the Ministry expanded the eligibility to include small business owners in industries with a sales decline rate of 10-20% who received up to 1 million KRW from the 5th disaster relief fund, the Hope Recovery Fund.

The total guarantee limit per business will be increased from the existing 100 million KRW to 200 million KRW. Currently, the total guarantee amount limit per business is 100 million KRW, and many small business owners with large existing loan balances were often rejected when applying for guarantees due to exceeding the limit. Considering the ongoing 4th wave of COVID-19, the Ministry explained that the total guarantee limit has been expanded to 200 million KRW.

Restrictions by business type will also be abolished. Previously, only individual business owners could apply. To enhance fairness by business type, the Ministry added corporate business owners to the special guarantee support targets.

Kwon Young-hak, Director of Corporate Finance at the Ministry of SMEs and Startups, said, "We hope that expanding the eligibility for the Special Guarantee for Medium and Low Credit Small Business Owners will help meet the urgent funding needs of small business owners who are increasingly struggling due to the prolonged COVID-19 pandemic."