Seoul City Provides Proactive Support to Small Business Owners Showing Signs of Crisis

Preventing Closures by Establishing a Solid Safety Net

[Asia Economy Reporter Kiho Sung] On the 2nd, the Seoul Metropolitan Government announced that it will take proactive support measures and establish a solid safety net to prevent small business owners and self-employed individuals, who are struggling due to the triple crisis (high interest rates, high prices, and high exchange rates) following COVID-19, from collapsing.

This project is characterized by proactively identifying and supporting small business owners facing crises through big data analysis, and providing meticulous support tailored to different situations such as business closure and re-startup. In particular, with the increasing number of young people in their 20s and 30s starting their first workplace as entrepreneurs, the city showed its determination to minimize the number of young business owners who close their businesses due to lack of experience, capital, and know-how.

First, the city will directly identify 1,000 small business owners showing signs of crisis and provide customized support. Instead of a passive approach that helps small business owners who request support at the brink, this method finds small business owners with crisis signals (such as sharp sales decline, increase in high-interest loans, etc.) based on various big data including sales, credit, and debt, and provides tailored prescriptions.

Additionally, for 2,000 small business owners considering business closure, the city will provide ‘business recovery and safe closure support.’ Experts will carefully diagnose and prioritize necessary support to prevent closures as much as possible and help sustain businesses. Along with this, the city will also support the recovery of small business owners who have re-started after closure in various ways. By evaluating their will to recover and business plans, 200 small business owners will be selected to receive basic legal education necessary for business operations such as the Commercial Lease Protection Act and Labor Standards Act, as well as 1:1 consulting on re-startup and management improvement.

Meanwhile, the Seoul Metropolitan Government added that it plans to steadily implement lifecycle support this year, covering the entry stage (startup), growth stage (management improvement), and re-challenge stage (business closure) that it has been promoting.

Lifecycle support mainly aims to minimize the possibility of failure through more meticulous consulting and systematic education for prospective entrepreneurs to prepare for a well-prepared startup, and to present management strategies to enhance competitiveness for small business owners striving to overcome crises.

Details of the ‘Comprehensive Small Business Support Project’ can be found on the Seoul Metropolitan Government website and the Seoul Small Business Comprehensive Support Portal in February.

Park Jaeyong, Director of Labor, Fairness, and Coexistence Policy at Seoul City, said, “We plan to provide systematic support so that small business owners are not driven to the worst situation of business closure due to high interest rates and consumption slowdown following COVID-19,” and added, “Even in unavoidable cases of closure, we will minimize the shock, secure a safe exit, and help them recover quickly.”