[Corporate Growth Ladder] 'Let's Grow Small and Medium Enterprises'... 500 Billion KRW New Guarantee Injection

Startup with a Guarantee Support Limit of Only 1 Billion KRW
Future Mid-sized Candidates 15 Billion KRW, Deferred Companies 20 Billion KRW

The government will provide 500 billion KRW in new guarantees to help scale up small and medium-sized enterprises (SMEs) in advanced industries. Additionally, to promote the growth of SMEs, 20% of a dedicated fund will be prioritized for investment in prospective and early-stage mid-sized enterprises.

On the 3rd, the Ministry of Economy and Finance held an Economic Ministers' Meeting at the Government Complex Sejong, chaired by Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok, where it announced the "Corporate Growth Ladder Establishment Plan" containing these measures.

According to the plan, the government will expand scale-up support for SMEs in the materials, parts, and equipment (SoBuJang) and future strategic industries sectors. Once a company becomes a prospective or early-stage mid-sized enterprise, the guarantee support limit from the Korea Technology Finance Corporation will increase. Previously, startups had a guarantee limit of only 1 billion KRW, and even after scaling up, support was capped at 10 billion KRW. However, prospective mid-sized enterprises can now receive guarantees up to 15 billion KRW, and for deferred companies, up to 20 billion KRW.

The Primary Collateralized Bond Obligation (P-CBO) has expanded its support target from SMEs to mid-sized enterprises. P-CBO is a financial product that supports fundraising by issuing securities based on corporate bonds issued by individual companies. The government plans to create a "Growth Ladder P-CBO" next year and supply 600 billion KRW in new funds. The Korea Credit Guarantee Fund and others will directly issue the product and lower interest rates.

The financial support system will also be restructured to encourage growth. From next year, a 5 trillion KRW mid-sized enterprise exclusive fund jointly established by commercial banks and the private sector will invest at least 20% in prospective and early-stage mid-sized enterprises. To facilitate smooth large-scale funding for promising companies, the compensation structure for policy fund operators will also be revised.

This year’s low-interest loans exclusively for mid-sized enterprises will increase technology-based funding that considers innovation and growth potential rather than financial statements. Loans will be supported with a preferential interest rate of 1 percentage point up to a maximum of 150 billion KRW per company, prioritizing loan opportunities for technologically excellent SMEs. Since loan demand is high among mid-sized enterprises, the government plans to expand this year’s supply volume of 16.3 trillion KRW.

The government also announced support for new industry entry through mergers and acquisitions (M&A) and stable business succession. To activate M&A brokerage, an M&A dedicated center will be established by the first half of next year, and cooperation with private institutions will provide support such as valuation and consulting. Additionally, a special guarantee for business succession-type M&A will be introduced to help SMEs transfer their technology or know-how.

The scope of application for the business succession inheritance tax deduction will be discussed for expansion. Currently, it applies to SMEs and mid-sized enterprises with sales under 500 billion KRW. To support continuous growth, the government will also consider expanding the range of business assets eligible for the deduction.