4.2 Trillion Won in Supplementary Budget to Address Liquidity Crisis
New Emergency Funds for Companies Hit by U.S. Tariffs and Wildfires
Expanded Tailored Support for Credit-Vulnerable and Innovative Small Business Owners
On May 13, the Ministry of SMEs and Startups announced an additional supply plan for policy-based financial support for SMEs and small business owners, reflecting the first supplementary budget for 2025.
This year, the ministry will provide a total of 30.7 trillion won in policy-based financial support to SMEs and small business owners in 2025, by adding 4.2 trillion won from the supplementary budget to the original policy finance budget of 26.5 trillion won.
Minister Oh Youngjoo of the Ministry of SMEs and Startups is speaking at the Economic Ministers' Meeting and the Industrial Competitiveness Enhancement Ministers' Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 1st. Photo by Yonhap News
First, to enhance the ability to respond to internal and external uncertainties stemming from U.S. tariff measures and sluggish domestic demand, an additional 1.7 trillion won in policy-based financial support for SMEs will be supplied. Of the 500 billion won in SME policy funds, 1. 100 billion won will be allocated to emergency funds for trade risk response; 2. 300 billion won to emergency management stabilization funds; and 3. 100 billion won to new market entry support funds.
The emergency fund for trade risk response was newly established this year as a temporary measure to broadly support SMEs facing management difficulties, either because they operate in industries affected by U.S. tariffs or because they have a high proportion of exports to the U.S. Given its temporary nature, the repayment period for operating funds is set at six years, which is one year longer than other funds, and a one-year extension is possible upon company request. The loan interest rate is set at 0.3 percentage points lower than the base rate for SME policy funds.
The emergency management stabilization fund has been increased by 300 billion won to provide stronger support to SMEs experiencing management difficulties due to internal and external uncertainties, as well as SMEs affected by wildfires in North Gyeongsang and South Gyeongsang provinces. Up to 1 billion won in operating funds (up to 1.5 billion won over three years) can be provided, and the loan interest rate is 0.5 percentage points higher than the base rate for policy funds.
The new market entry support fund has been increased by 100 billion won to help SMEs explore new markets or diversify export destinations amid rapidly changing global trade conditions. Up to 1 billion won in operating funds and up to 3 billion won in facility funds can be provided, with the policy fund base rate applied to loans.
Through this supplementary budget, the Korea Technology Finance Corporation (KIBO) has introduced a special guarantee to help companies directly or indirectly affected by U.S. tariff measures overcome trade environment crises. Through this newly established special guarantee, liquidity totaling 1.2 trillion won will be supplied swiftly. Eligible recipients include SMEs in crisis industries directly or indirectly affected by U.S. tariffs, as well as high-tech companies in opportunity industries.
The first floor of a commercial building on a main street near Gangnam Station in Seoul is vacant due to a business closure. Photo by Kang Jinhyung
To further strengthen the financial safety net for small business owners who are excluded from private sector finance, the supply of policy-based financial support for small business owners will be expanded by 2.5 trillion won. To support the management stability and growth of small business owners, 500 billion won in policy funds will be provided, including 140 billion won for general management stabilization funds, 240 billion won for credit-vulnerable funds, and 120 billion won for innovation growth promotion funds.
The general management stabilization fund is available to all small business owners regardless of business history. Operating funds are provided through proxy loans from commercial banks, with a loan limit of up to 70 million won over five years, and the loan interest rate is 0.6 percentage points higher than the base rate for small business policy funds.
The credit-vulnerable fund is intended for small business owners with medium or low credit scores (NCB credit score of 839 or below) who face difficulties obtaining loans from financial institutions. It is provided directly by the Small Enterprise and Market Service, with up to 30 million won available over five years. The loan interest rate is 1.6 percentage points higher than the policy fund base rate.
The innovation growth promotion fund is designed to support the sustainable growth of small business owners with high growth potential, and is also provided directly by the Small Enterprise and Market Service. Up to 100 million won (general type) or 200 million won (innovation type) in operating funds can be provided over five years, and up to 500 million won (general type) or 1 billion won (innovation type) in facility funds can be provided over eight years. The loan interest rate is 0.4 percentage points higher than the policy fund base rate.
To alleviate management difficulties for small business owners and support those affected by wildfires in North Gyeongsang and South Gyeongsang provinces, an additional 2 trillion won in new guarantees will be supplied by regional credit guarantee foundations. This brings the total supply of new guarantees for the recovery of small business livelihoods to 14.4 trillion won this year, adding to the original budget of 12.2 trillion won.
The ministry stated, "Given the urgent need to provide liquidity to SMEs and small business owners, we plan to implement this supplementary policy-based financial support through a rapid execution system."
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