Ministry of SMEs and Startups Supplementary Budget of 25.8 Trillion Won Passed... 322 Billion Won Increase from Government Proposal
6 to 10 Million Won Paid to 3.71 Million Places Based on Damage Scale
Special Guarantee of 4.2 Trillion Won Planned... 1 Million Won Rechallenge Incentive
[Asia Economy Reporter Kim Bo-kyung] Starting today (the 30th), the government will provide loss compensation funds totaling 23 trillion won to 3.71 million small business owners, small enterprises, and medium-sized enterprises with annual sales under 5 billion won, with a maximum payment of 10 million won per business.
The Ministry of SMEs and Startups announced on the 30th that the supplementary budget, which passed the National Assembly plenary session on the 29th, was finalized at 25.8575 trillion won, an increase of 322 billion won compared to the government's original proposal.
The supplementary budget includes 23 trillion won for loss compensation to cover the accumulated damages of small business owners due to COVID-19 quarantine measures, 1.6 trillion won for loss reimbursement, and 1.2 trillion won for financial support (with a supply of 12.9 trillion won), among others.
◆ Loss Compensation 23 Trillion Won "Largest Ever" = First, to compensate for the losses of small business owners and self-employed individuals over the past two years, the largest-ever loss compensation fund of 23 trillion won has been allocated.
The support targets approximately 3.71 million small business owners, small enterprises, and medium-sized enterprises with annual sales under 5 billion won whose sales have decreased. Payments range from a minimum of 6 million won to a maximum of 10 million won depending on the scale of damage to each individual business.
The Ministry of SMEs and Startups stated, "To ensure smooth and prompt execution of the loss compensation funds, we have collaborated with the National Tax Service and local governments to pre-select eligible recipients and established an online application and payment system." They added, "After procedures such as the Cabinet meeting and fund allocation, payments are scheduled to begin today."
◆ Loss Reimbursement System Improvement 1.6 Trillion Won = An additional budget of 1.6 trillion won has been allocated to fully compensate for losses directly caused by government quarantine measures.
From the first quarter of 2022, the correction rate for calculating compensation will be raised from the previous 90% to 100%, and the minimum quarterly loss compensation amount will be increased from 500,000 won to 1 million won.
Additionally, the scope of loss reimbursement will be expanded to include medium-sized enterprises with annual sales up to 3 billion won.
The Ministry of SMEs and Startups said, "We plan to fully (100%) compensate for losses incurred during the quarantine period and provide robust support to micro small business owners who may receive lower compensation due to their small sales scale, ensuring complete compensation."
◆ Emergency Financial Support 12.9 Trillion Won = To support the recovery and restart of small business owners affected by COVID-19, a budget of 300 billion won has been allocated for tailored special guarantees responding to urgent funding demands, with a total of 4.2 trillion won planned.
Specifically, a budget of 220 billion won has been allocated to support small business owners who have suffered direct damages such as sales decline, providing special guarantees worth 3.2 trillion won for working capital and facility/equipment funds.
Additionally, to support the restart of closed small business owners, a budget of 80 billion won has been allocated to supply 1 trillion won in special guarantees for re-establishment.
A budget of 880 billion won has been allocated for refinancing loans that convert high-interest loans into low-interest loans, with a total supply of 8.7 trillion won. Refinancing loans target small business owners affected by COVID-19 who are faithfully repaying high-interest business loans, and the Ministry of SMEs and Startups and the Financial Services Commission will cooperate to implement this through loan and guarantee methods.
For low-credit small business owners who urgently need refinancing or have difficulty obtaining guarantees, a budget of 200 billion won has been allocated, and the Small Enterprise and Market Service will prioritize supplying loans worth 200 billion won starting in July.
For small business owners eligible for guarantees, a budget of 680 billion won has been allocated, and the Korea Credit Guarantee Fund plans to supply guarantees worth approximately 8.5 trillion won starting in October, when maturity extensions and repayment deferrals end.
◆ 1 Million Won Rechallenge Incentive for Closed Small Business Owners = Small business owners who closed their businesses this year will also receive a 1 million won rechallenge incentive to promote employment and re-establishment. The rechallenge incentive will be linked with re-establishment education and other programs to provide practical support for the restart of closed small business owners.
To respond to non-face-to-face and digitalization trends, additional support will be provided for online market entry using mobile, internet malls, V-commerce, live commerce, and home shopping channels. This includes 7,000 mobile stores, 4,400 internet malls, 800 V-commerce stores, 400 live commerce stores, and 50 home shopping channels, with a budget of 22.35 billion won reflected in this supplementary budget.
Smart stores (1,400 units) and smart workshops (250 units) will also be additionally distributed to support the digital transformation of small business owners.
Minister Lee Young of the Ministry of SMEs and Startups stated, "A significant portion of the first supplementary budget of the new government is allocated to support small business owners," and added, "We will mobilize all administrative capabilities of the Ministry of SMEs and Startups and the Small Enterprise and Market Service to execute the budget as quickly as possible."
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