9.4 Trillion KRW Support for Excluded Sectors from Loss Compensation Including Accommodation and Outdoor Sports Facilities

"Support for 1% Low-Interest Loans up to 20 Million Won for 100,000 People"

Chairman Oh Se-hee of the Korea Federation of Small and Medium Business, along with co-chairmen of the Self-Employed Emergency Committee, held a press conference on the 8th of last month in front of the tent protest site set up at Sejongno Park near the Government Seoul Office in Jongno-gu, Seoul, urging the relaxation of quarantine guidelines and compensation for losses. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Moon Chaeseok] The government has decided to provide 9.4 trillion won worth of livelihood support to industries excluded from loss compensation, such as lodging and outdoor sports facilities. The support will mainly be implemented through financial assistance, including loans worth over 2 trillion won and easing loan conditions worth over 6 trillion won. It plans to offer ultra-low interest loans (1.0%) up to 20 million won to 100,000 small business owners in industries with restrictions on personnel and facility usage, such as lodging.

On the 23rd, the government announced the "Livelihood Economy Support Plan for Small Business Owners, etc." which includes these details. Out of the total support fund of 12.7 trillion won, 9.4 trillion won will be allocated to support industries excluded from loss compensation. Broadly, this includes 8.9 trillion won in financial support, 400 billion won to reduce burdens from various utility bills such as electricity, and 100 billion won for sales recovery through local gift certificates.

First, customized financial support such as ultra-low interest loans will be provided to industries excluded from loss compensation. By the end of the year, 2 trillion won in special recovery loans with the lowest interest rate ever of 1.0% will be supplied to 100,000 businesses in sectors such as lodging, outdoor sports facilities, wedding and funeral halls, and massage and therapy centers, with a loan limit of 20 million won. Next year, an additional approximately 50 billion won in low-interest loans at 1.6% with a maximum limit of 8.5 billion won will be supplied to about 250 indoor facilities outside the metropolitan area and outdoor sports facilities nationwide.

6.3 trillion won will be invested in emergency loan programs. This year, 2 trillion won will be spent on emergency loans for small business owners, and next year, 3.6 trillion won for tourism loans and 700 billion won for hope loans will be invested respectively. By the end of the year, COVID-19 special guarantee support will be expanded to 100,000 businesses in sectors such as lodging, outdoor sports facilities, wedding and funeral halls, and massage and therapy centers. Previously, this was only available to medium- and low-credit general industries, but the scope will be expanded to include medium-credit prohibited, restricted, and management crisis industries. A guarantee fund of 1 trillion won will be provided with an interest rate around 2.3% and a loan limit of 20 million won. The target for low-credit special damage industry loan support will be expanded from credit rating 6 or below to 5 or below. To this end, 1.2 trillion won will be invested.

Next year, 4.3 trillion won will be spent on tourism fund loan support for 80,000 businesses. In particular, for tourism fund loan support for travel and lodging industries, the interest rate on the entire loan balance of 3.6 trillion won next year will be temporarily reduced by up to 1 percentage point. Additionally, a one-year principal repayment deferral will be supported from the time of application. Furthermore, the target for 700 billion won worth of low-credit small business owner hope loans next year will be expanded to include industries with personnel and facility usage restrictions. Previously, support was only provided to low-credit prohibited and restricted industries.

Moreover, the government will invest 400 billion won to support various utility bills. Specifically, for about 940,000 businesses (including 140,000 businesses with decreased sales among industries with personnel and facility restrictions and 800,000 businesses eligible for loss compensation), electricity bills will be reduced by 50% and industrial accident insurance premiums by 30% for two months.