[Compensation] 2.4 Trillion Won to be Paid from the 27th to 800,000 Small Businesses and Small Merchants

From the 27th to 29th, applications submitted before 4 PM will be paid the same day
Notification texts sent to 620,000 rapid compensation recipients on the 27th and 28th, odd-even application system operated for 4 days from the 27th to 30th

Kang Sung-cheon, Vice Minister of the Ministry of SMEs and Startups, is briefing on the Q3 loss compensation payment plan at the Ministry of SMEs and Startups briefing room in Sejong on the 26th.
[Photo by Ministry of SMEs and Startups]

[Asia Economy Reporter Kim Jong-hwa] From the 27th, small businesses and micro-enterprises that have suffered significant operational losses due to compliance with government-ordered gathering bans and business hour restrictions can apply for and receive compensation. Additionally, text messages guiding the application process will be sent from 8 a.m. on the 27th and 28th to 620,000 eligible recipients for rapid compensation.

The Ministry of SMEs and Startups announced on the 26th that it held the 2nd Loss Compensation Deliberation Committee meeting and approved the "2021 Q3 Loss Compensation Payment Plan (draft)," stating that applications will be accepted online from the 27th via the website (소상공인손실보상.kr).

Applications and Payments Begin on the 27th, 800,000 Small Businesses and Micro-Enterprises, KRW 2.4 Trillion Scale

The compensation targets are 800,000 small businesses and micro-enterprises that complied with gathering bans and business hour restrictions from July 7 to September 30 and suffered significant operational losses. The total compensation amount is approximately KRW 2.4 trillion.

Compensation payments will proceed in three stages: rapid compensation, verification compensation, and objection submission. Rapid compensation, starting on the 27th, pre-calculates compensation amounts using administrative data from the National Tax Service and local governments, allowing quick payment upon application without document submission. Verification compensation is for those who disagree with the pre-calculated amount and involves resubmitting evidence for recalculation. If still dissatisfied, an objection can be filed.

The Q3 loss compensation is tentatively estimated to pay KRW 2.4 trillion to 800,000 businesses. Among them, 27,000 (3%) are gathering ban compliance businesses, and 773,000 (97%) are business hour restriction compliance businesses. The total compensation amount of KRW 2.4 trillion is KRW 1.4 trillion more than the previously allocated budget of KRW 1 trillion. This more than doubles the budget, reflecting the increased damage to small businesses due to strengthened quarantine measures since July.

Compensation scale for losses in the third quarter of 2021. [Table=Ministry of SMEs and Startups].

Rapid Compensation of KRW 1.8 Trillion to 620,000 Businesses... Restaurants and Cafes Most Numerous at 450,000

Based on administrative data, the rapid compensation target for Q3 is 620,000 businesses with a total of KRW 1.8 trillion. This accounts for 77% of the total 800,000 Q3 compensation targets and 73% of the total compensation amount of KRW 2.4 trillion.

The largest number of compensated businesses are restaurants and cafes at 450,000 (73.6%, KRW 1.3 trillion), followed by beauty and bath businesses at 52,000 (8.5%), and academies at 32,000 (5.2%). The average compensation amount by industry is highest for entertainment facilities at KRW 6.34 million, attributed to significant revenue declines due to prolonged gathering bans compared to other sectors.

Among the rapid compensation targets, 300,000 are small-scale businesses with annual sales under KRW 80 million, subject to simplified taxation, accounting for 49.2% of the total 620,000. Businesses with annual sales between KRW 150 million and KRW 1 billion (based on small businesses in food and lodging) make up about 30.7%.

Businesses receiving compensation between KRW 1 million and KRW 5 million number 203,000, representing 33.0% of the total. Those receiving over KRW 5 million are 93,000 (15%), and about 330 businesses (0.1%) receive the maximum compensation of KRW 100 million. Businesses receiving the minimum compensation of KRW 100,000 total 90,000 (14.6%), who will receive an additional average of KRW 62,000 beyond the initially calculated amount.

Among these 90,000 businesses, 69,000 (76.8%) have annual sales under KRW 80 million (simplified taxation). Also included are 23,000 beauty and bath businesses (25.1%) with generally lower compensation amounts due to shorter quarantine compliance periods.

Four Payments Daily for Three Days from the 27th to 29th, Apply by 4 p.m. to Receive Payment Same Day

Small businesses and micro-enterprises can apply for compensation easily without additional documents through the dedicated website (소상공인손실보상.kr) starting on the 27th. During the first three days (27th to 29th), payments will be made four times daily. Therefore, applications submitted by 4 p.m. will receive payment on the same day.

Applications made between 00:00 and 07:00 will be paid at 10 a.m. the same day; between 07:00 and 11:00, at 2 p.m.; between 11:00 and 4 p.m., at 7 p.m.; and between 4 p.m. and midnight, payments will start at 3 a.m. the following day. Notably, text messages guiding applications will be sent from 8 a.m. on the 27th and 28th to 620,000 rapid compensation recipients.

On the 27th, messages will be sent to 310,000 businesses with odd-numbered business registration numbers, and on the 28th, to 310,000 with even-numbered registration numbers.

If you do not receive a text message, you can still check your eligibility on the loss compensation dedicated website '소상공인손실보상.kr,' which opens at 8 a.m. on the 27th.

Eligibility can also be confirmed via the call center (1533-3300) and online chat consultation (손실보상114.kr), which have been operating since the 8th. A staggered application system based on odd/even business registration numbers will operate during the first four days (27th to 30th). From the 31st, applications will be accepted regardless of number parity.

Offline Applications Available at Dedicated Counters in City/County/District Offices, Objections Within 30 Days

Small business owners who find online applications difficult can apply offline. From the 3rd of next month, they can visit dedicated loss compensation counters set up at nearby city, county, or district offices to apply. Businesses that disagree with the rapid compensation amount or those that complied with gathering bans or business hour restrictions but were not included in rapid compensation can apply for verification compensation.

Verification compensation applications can also be submitted online starting on the 27th, but offline applications will be accepted from the 10th of next month. If still dissatisfied with the verification compensation results, objections can be filed within 30 days from the date of notification.

From the 27th, over 300 dedicated loss compensation guidance counters will operate nationwide at regional SME offices, city/county/district offices, and Small Enterprise and Market Service regional centers. Questions can also be asked via the loss compensation call center and online chat consultation. Detailed compensation criteria, calculation methods, and application procedures can be found in the small business loss compensation announcement on the Ministry of SMEs and Startups website.

Minister Kwon Chil-seung of the Ministry of SMEs and Startups said, "I am very pleased that we can institutionally compensate small business owners who have endured prolonged quarantine measures due to the prolonged COVID-19 pandemic." He added, "The significantly increased loss compensation compared to the existing budget is expected to help alleviate the management difficulties of small businesses caused by gathering bans and business hour restrictions."