Jungjingong Supports Promising Startups with 100 Billion KRW Scale Investment and Financing

Leading the Way to Bridge the Gaps in Private Investment
for Initial Investment, Non-Metropolitan, and Startup Companies

The Small and Medium Business Corporation announced on the 3rd that it will begin accepting applications for policy funds through an investment-lending method in accordance with the '2025 SME Policy Fund Loan Plan.'

The 2025 investment-lending support budget totals 100 billion KRW, consisting of ▲50 billion KRW for growth-sharing loans and ▲50 billion KRW for investment-conditional loans. The growth-sharing loan operates by the Small and Medium Business Corporation acquiring convertible bonds (CB), redeemable convertible preferred stocks (RCPS), and convertible preferred stocks (CPS) from companies with excellent growth value and high potential for initial public offering (IPO), with a maximum limit of 2 billion KRW per company. Especially from this year, to resolve the imbalance in private venture investment, the plan is to focus support on companies located outside the metropolitan area, startups, and companies with cumulative pre-investment amounts of 300 million KRW or less.

Additionally, to strengthen corporate choice and improve financial structure, a new 'convertible preferred stock (CPS)' method will be introduced. Convertible preferred stock is preferred stock with the right to convert into common stock and, since it does not have a redemption right, it enables stable long-term growth support for companies compared to redeemable convertible preferred stock.

Jungjingong

Last year, the Small and Medium Business Corporation newly launched a bridge loan worth 50 billion KRW annually using the 'investment-conditional loan' method to help startups overcome the Death Valley. This year as well, it plans to provide large-scale low-interest loans mainly to companies with excellent technology but whose financial performance has not yet materialized, offering growth opportunities to promising companies.

The target for investment-conditional loan support is companies that have received venture investment of 100 million KRW or more from investment institutions within the last 24 months as of the application date. As a support condition, when the Small and Medium Business Corporation provides the loan, it receives warrants equivalent to 5% of the total loan amount, and supported companies repay the loan early with investment funds upon attracting follow-up investment. Previously, companies had to repay 20% of the follow-up investment amount, but from this year, they will repay 20% of the investment amount with a repayment cap set at 20% of the loan amount to reduce the burden on companies.

Kang Seok-jin, the director, said, “We will expand investment-lending support focusing on the growth potential of companies,” and added, “The Small and Medium Business Corporation will play a pivotal role as a policy financial institution so that promising venture startups in the blind spots of private investment can continue to grow.”