Up to 600,000 Won Monthly Relief for Faithful Small Business Loan Repayers

Ministry of SMEs and Startups Announces Special Financial Measures
Repayment Period Extended Up to 7 Years, Preferential Interest Rates Increased
Comprehensive Recovery Consulting for Closed Businesses and At-Risk Borrowers

The Ministry of SMEs and Startups is launching a comprehensive financial safety net for small business owners. Special measures such as extended repayment periods and interest rate reductions will be provided to small business owners who have faithfully repaid policy loans and guarantees, even in challenging circumstances. The ministry will also promote the expansion of long-term guarantee programs and the scope of burden-relief credits for small business owners who have closed their businesses.

On July 30, the Ministry held a relay roundtable at the Jungbu Small Business Support Center in Jongno-gu, Seoul, to announce these financial safety net support policies aimed at strengthening the recovery and safety net for small business owners.

Hansung Sook, Minister of SMEs and Startups, is attending the 'Communication Meeting with Small and Medium Business Organizations' held at the Korea Federation of SMEs in Yeouido, Seoul, on the 29th, delivering an opening remark. Photo by Yoon Dongjoo

This relay roundtable is being held to immediately address the first policy priority emphasized by Minister Han Sung-sook since her candidacy, which is the "recovery and establishment of a safety net for small business owners." Over the course of approximately two months, the Minister and Vice Minister of the Ministry of SMEs and Startups plan to hold a total of 10 relay roundtables, each focusing on financial safety nets, crisis safety nets, and safety nets for business closure and restart.

First, a special package will be implemented for small business owners who have faithfully repaid their existing policy loans and guarantees, offering up to seven years of installment repayments and a 1 percentage point reduction in interest rates. The support will cover approximately 190,000 individuals who are diligently repaying direct loans from the Small Enterprise and Market Service or guaranteed loans from regional credit guarantee foundations. Based on the typical amount of 30 million won with an interest rate of 4.28% for direct policy loans, the monthly repayment burden is expected to decrease from 940,000 won to 340,000 won, a reduction of up to 600,000 won. Applications for this special support can be submitted on the Small Business Policy Fund website starting today.

Next month, a separate installment guarantee support program will be launched for small business owners who have closed their businesses and hold existing guaranteed loans from regional credit guarantee foundations. This program will provide up to 15 years of installment repayments and low-interest loans. Previously, the bridge guarantee for closed business owners allowed installment repayments for up to seven years, but this new guarantee will extend the repayment period from seven to fifteen years. If a faithfully repaying small business owner applies for an additional direct policy loan, preferential interest rates, relaxed borrowing limits, and additional funding will be applied. The preferential interest rate for new loans, previously set at 0.1 percentage points, will be increased to 0.3 percentage points. The number of loans allowed within five years will also be increased from three to four. Faithful business partners and small business owners can also apply for the Innovation Growth Promotion Fund, which supports up to 200 million won within the Small Business Policy Fund.

Among small business owners who have received the special installment and interest reduction support, those at risk of delinquency will be provided with integrated support for recovery and restart, including consulting services. For those who agree to participate, one-on-one expert consulting will be offered to address fundamental management difficulties. For small business owners who are unable to continue their business due to lack of sales or other reasons, comprehensive support will be provided for business closure or industry transition, including tax and labor consulting, store demolition costs upon closure, and education for employment or re-entrepreneurship, all in a one-stop manner.

At the roundtable, Minister Han also announced plans to expand the scope of burden-relief credit usage. The burden-relief credit, established through the first supplementary budget, is a system that provides up to 500,000 won per person to approximately 3.11 million small business owners with annual sales of 300 million won or less, for use in paying utility bills and the four major social insurance premiums. Taking into account the difficulties in using the credit when utility bills are included in building management fees or when there is little to no expenditure on social insurance premiums due to dependent registration, the ministry plans to expand the scope of eligible expenses from utility bills and social insurance premiums to also include telecommunication fees and vehicle fuel costs in the near future.

Minister Han stated, "I believe that the recovery and growth of small business owners, who are at the heart of our livelihoods, is the most urgent and important task. Through these roundtables, we will swiftly reflect the needs of the field in our policies."