Minister Kwon Chil-seung Announces Supplementary Measures for Excluded Loss Compensation Industries
Up to 20 Million KRW... Total 2 Trillion KRW in Special Loan Funds
Small Business Federation "Urgent Need for Cash Support... Regretful and Disappointed"
Minister Kwon Chil-seung of the Ministry of SMEs and Startups is saluting the national flag before the Small Business Policy Council meeting at the Government Seoul Office on the 23rd.
[Asia Economy Reporter Kim Bo-kyung] The government will provide special loans of up to 20 million won at an ultra-low interest rate of 1% to small business owners who are in the blind spots of the loss compensation system. Small business owners in industries excluded from loss compensation, such as lodging facilities, outdoor sports facilities, weddings, and funeral halls, who have experienced a decrease in sales are expected to benefit. The small business sector responded with "It falls short of expectations."
On the 23rd, Kwon Chil-seung, Minister of SMEs and Startups, held a Small Business Policy Council meeting at the Government Seoul Office and announced the "Support Plan for Recovery of Small Businesses Affected by COVID-19."
Special loans up to 20 million won... Applications open from the 29th
The Ministry of SMEs and Startups will provide a total of 2 trillion won in special loans at an ultra-low interest rate of 1%, up to 20 million won, to 100,000 small businesses affected by quarantine measures that restricted personnel and facility operations, rather than 'closure or operating hour restrictions,' which are not eligible for loss compensation.
For example, small business owners who implemented personnel and facility operation restrictions such as allowing one person per 4㎡, 8㎡, or 16㎡, limiting capacity to 30%, 50%, or 70%, or using three-quarters or two-thirds of rooms are eligible.
Eligible small businesses must have experienced a decrease in sales due to personnel and facility operation restriction measures implemented from July 7 to September 30 and must have opened before September 30. Special loans are expected to benefit industries excluded from loss compensation, such as wedding halls, funeral halls, lodging businesses, outdoor sports facilities, and tourism and travel industries that faced personnel and facility usage restrictions.
However, even within the same industry, eligibility for special loans varies depending on the social distancing level applied by local governments, so applicants should check the Small Enterprise and Market Service policy fund website for guidance. For example, karaoke rooms in the metropolitan area under social distancing level 4 are eligible for loss compensation due to operating restrictions after 10 p.m., but in Ulleung-gun, Gyeongbuk, where level 1 is applied, they are eligible for special loans due to the 'one person per 6㎡' restriction.
If quarterly or monthly sales from July to September this year decreased compared to the same period in 2019 or 2020, the business is eligible. Businesses opened between June and September this year without tax data are included regardless of sales decline.
Applications will be accepted from 9 a.m. on the 29th via the Small Enterprise and Market Service policy fund website. The first week will operate on a five-day rotation system, but from the 4th of next month, applications will be accepted regardless of the day of the week.
Small business sector immediately reacts... "Loan limits are already full"
The small business sector expressed immediate disappointment, saying, "It is regrettable that only loan measures were announced when cash support is urgently needed."
The Korea Federation of Small and Medium Business Associations stated in a commentary that "We have been urging the allocation of additional disaster relief funds for industries excluded from loss compensation and cash support through the use of funds from various ministries."
They added, "However, today's announced plan is financial support providing loans to industries excluded from loss compensation," and "The direct cash support plan was scrapped, making this a disappointing measure that falls short of expectations."
The Federation said, "Industries such as travel and tourism are effectively prohibited from gathering, and comprehensive cash support for these and other industries excluded from loss compensation is urgently needed, so it is regrettable that only loan measures were announced."
They also criticized, "Even for loans, since existing limits are already full, it is questionable whether additional loans will be smoothly provided," and asked the government, "Are small business owners and self-employed people supposed to continue living under the burden of debt?"
Minister Kwon said in a briefing regarding demands for cash support, "It is the end of the year now. To create support measures, a supplementary budget (additional budget) is needed," and "If a supplementary budget is made, it inevitably has to proceed with next year's main budget, so it is procedurally impossible to execute it this year."
He added, "The government's swift execution is currently the best course of action," and "Since it is the season to draft next year's new budget, we will discuss with the National Assembly to ensure that substantial support measures can be supplemented next year."
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