Ministry of SMEs and Startups Allocates 1 Trillion Won in Second Supplementary Budget to Address Small Business Debt and More

Additional 310 Billion Won Allocated to Ease Small Business Debt Burden
4 Trillion Won Invested in Korea Venture Investment Fund to Respond to AI Technological Innovation
"A Catalyst for Normalizing the Business Environment of SMEs, Startups, and Small Business Owners"

On June 19, the Ministry of SMEs and Startups announced that, in response to the sluggish economic recovery and intensifying competition in artificial intelligence (AI) technology, it has prepared an additional 1.0405 trillion won for the second supplementary budget for 2025, following the first supplementary budget of 4.8 trillion won last month.

The Ministry stated that the second supplementary budget focuses on three main themes: the recovery and normalization of small business operations, the growth of SMEs and startups and revitalization of local economies, and the dissemination and utilization of technological innovation, including AI.

Empty storefronts are scattered throughout the commercial area near Ewha Womans University in Seodaemun-gu, Seoul. Photo by Kang Jinhyung

First, to support the recovery and normalization of small business operations, efforts have been made to address debt issues faced by small business owners. The Ministry of SMEs and Startups will work to ease the debt repayment burden for small business owners who struggled during the COVID-19 period, while the Financial Services Commission will focus on debt restructuring for non-performing loans.

The measures to alleviate repayment burdens for small business owners will be implemented through policy funds and special guarantees from regional credit guarantee foundations. Policy funds for small business owners will offer long-term installment repayment (extended from 5 to 7 years) and a 1 percentage point interest rate reduction to those facing management difficulties. Regional credit guarantee foundations will convert COVID-19-affected businesses to long-term (7 years) and low-interest (1 percentage point interest subsidy) special guarantees, and for closed businesses, the installment repayment period will be extended from 7 years to up to 15 years. In addition, the Hope Return Package program will receive an additional 17.1 billion won, raising the maximum support for store closure and restoration costs by 2 million won, with up to 6 million won available per business until the end of the year. The Smart Store program has also been expanded to reflect additional on-site demand.

To promote the growth of SMEs and startups and revitalize local economies, the budget for job-creating programs such as the Startup Package and the ICT Convergence Smart Factory Expansion Project has been increased. The Startup Package program will receive 42 billion won to accelerate the growth of promising deep-tech startups in fields such as AI and bio, and an additional 200 billion won will be allocated to innovation startup commercialization funds to facilitate financing for startups. The ICT Convergence Smart Factory Expansion Project will introduce a new AI track to advance the smart transformation of local manufacturing SMEs, with an additional 24 billion won allocated for autonomous factories and win-win cooperation models between large, medium, and small enterprises.

To further disseminate and utilize technological innovation, support will be expanded for region-led AI transformation, investments in the Korea Venture Investment Fund, and the nurturing of super-gap startups. The region-led AI transformation program, newly allocated 50 billion won, will support the development and adoption of AI solutions, talent training, and infrastructure through locally tailored programs autonomously planned by local governments, aiming to impact the entire ecosystem. An additional 400 billion won will be invested in the Korea Venture Investment Fund to provide large-scale growth capital for deep-tech ventures and startups aiming to become unicorns, and 12 billion won will be added to the Super-Gap Startup 1000+ Project.

Oh Youngju, Minister of SMEs and Startups, stated, "Through the second supplementary budget, we will actively support the rapid normalization and growth of the business environment for SMEs, startups, and small business owners," adding, "We are also continuously monitoring the swift implementation of projects supported by the first supplementary budget."