From Financial Support to Business Environment Improvement... Seoul City Invests 530 Billion Won to Revive Small Business Owners

'Small Business Support Project' Announcement
Providing Funds and Sales Assistance to Prevent Small Business Closures
Support System Even for Re-entrepreneurship and Employment Transition

The Seoul Metropolitan Government will provide a total of 535.6 billion KRW in support next year for small business owners hit by the economic downturn. Key measures include long-term, low-interest financial support for micro small business owners and the establishment of overdraft accounts for medium- and low-credit small business owners. In particular, unfair practices between franchise headquarters and franchisees will be addressed to help them operate normally.

On the 26th, Seoul Mayor Oh Se-hoon announced the 'Small Business Support Project' at Seoul City Hall, outlining these support measures. The comprehensive support plan includes immediate financial aid to resolve crises, sales increase strategies, and the creation of a fair environment, focusing on 19 projects across four major areas: ▲Financial Support+ ▲Sales Support+ ▲Fairness Support+ ▲New Path Support+.

The city identified next year as the 'first year for cardiopulmonary resuscitation of small business owners and self-employed,' emphasizing strengthening their self-sustainability as the core of this project. To prevent repeated 'revolving door startups' involving closures and re-openings, re-entrepreneurs will be strictly prepared, and small business owners shifting to employment will be supported with stable job placement through vocational training.

Seoul Mayor Oh Se-hoon is giving a greeting speech at the 'Seoul Hangang Bus Launch Ceremony' held on the 25th at Eunsung Heavy Industries in Sacheon, Gyeongnam. Photo by Yonhap News

Supporting to endure financial and sales difficulties... City steps in

First, the city will provide quick, simple, long-term, and low-interest financial support to micro small business owners facing crises due to economic recession and changes in consumption trends centered on online channels. The scale is 2.1 trillion KRW, an increase of 235 billion KRW compared to this year.

An overdraft account called 'Safe Account' will be newly established for medium- and low-credit small business owners with credit scores above 600 who have been pushed to secondary and tertiary financial institutions due to difficulty obtaining loans from primary financial institutions. Applications can be made non-face-to-face up to 10 million KRW per person, with approval within one business day. The interest rate is about 5%, lower than the average market bank overdraft loan rate of 7.9%.

The 'Quick Dream Fund' targeting livelihood-type and medium- to low-credit small business owners with credit scores below 839 has expanded its support to include low-income and socially vulnerable groups. The 'Vulnerable Group Support Fund' has increased from 505 billion KRW to 650 billion KRW. Startup company funds will increase by 65 billion KRW to 100 billion KRW, and the small business 'Growth Support Fund' will be increased by 175 billion KRW to 240 billion KRW.

To help boost sales, the city will promote easing delivery and payment fees and expanding the use of Onnuri Gift Certificates. The number of neighborhood commercial districts where Onnuri Gift Certificates, scheduled to be issued at 5.5 trillion KRW next year, can be used will increase from the current 402 to 1,002 by 2029. The Seoul Pay app will also add Onnuri Gift Certificate payment functionality.

Public delivery apps with low commission fees will also be activated. Currently, public delivery app commissions are at 1-2%. The city plans to cooperate with the Korea Franchise Industry Association, the National Franchisee Council, small business organizations, and autonomous districts to increase franchise stores on public delivery apps and expand the use of autonomous district delivery-only gift certificates (15% discount) from the current 10 districts to all 25 autonomous districts.

The city will open Seoul Pay payment QR codes to simple payment companies with high payment fees such as Naver Pay, Kakao Pay, and Alipay, reducing fees to the card level of 1.25-1.5%. It is estimated that if 500 billion KRW in simple payments occur, small business owners will save about 8.8 billion KRW domestically and 13.5 billion KRW overseas in fees.

Creating a stable business environment... also supporting transition to 'employment'

On June 28, empty storefronts were located throughout the commercial area near Ewha Womans University in Seodaemun-gu, Seoul. Photo by Kang Jin-hyung

In addition to financial support for self-employed and small business owners, the city will also pursue environmental improvements. First, it will correct 'bad practices' between franchise headquarters and franchisees. To address the practice of franchise headquarters forcing franchisees to buy 'essential items' such as chopsticks, detergents, and rubber gloves at high prices, Seoul-style guidelines will be established. The main point is that only truly essential items will be purchased from headquarters, while items that can be bought more cheaply elsewhere can be purchased directly.

After investigating the difficulties faced by franchise stores due to mobile gift certificate usage fees ranging from 6% to 11%, measures to ease this burden will be prepared. A win-win cooperation channel will be established among mobile gift certificate platform companies, coupon companies, and franchise headquarters, encouraging voluntary coexistence through continuous investigation of unfair practices and proposals for system improvements.

Customized support will also be provided to small business owners seeking new paths. For those who close their businesses for unavoidable reasons, a dedicated closure expert will be matched one-on-one to provide support at all stages, including closure decisions, administrative procedures guidance, and up to 3 million KRW in closure expenses support. For those preparing for re-entrepreneurship, over 350 startup management experts will provide support from the start to prevent returning to closure.

Small business owners wishing to find employment will be linked to vocational training at the Seoul Metropolitan Government Technical Training Center or supported through the Seoul Job Center with employment counseling, consulting, and job placement. Next year, 200 people will be supported with vocational training and 800 with job placement. Mayor Oh said, "Small business owners, the lifeblood of Seoul's economy and the backbone of the local economy, who are working hard in their positions, will be supported by the Seoul Metropolitan Government until the end so they can overcome this crisis."