[New Government Growth Strategy] Expanded Loan Refinancing Support for Small Business Owners... Household Loan Limit Raised to 50 Million Won

Expansion of Loan Refinancing Support for Small Business Owners
Support Extended to Loans Taken Out up to This June
Repayment Period Increased from 5 to 7 Years
Special Interest Rate Reduction Measures Introduced
Support for SMEs Sufferi

The government is strengthening its financial support measures to allow small business owners to switch to loans with relatively lower interest rates. The loan support limit for small business owners who take out household loans will be raised to 50 million won.

Going forward, when companies that have suffered from technology theft file for damages, the Fair Trade Commission and the Ministry of SMEs and Startups will be required to submit investigation materials containing the perpetrator’s trade secrets to the court. This aims to prevent companies that have had their technology stolen from losing lawsuits due to the lack of mandatory submission of such materials.

Yonhap News

On August 22, the government held a joint briefing with the Ministry of Economy and Finance, the Ministry of Science and ICT, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of SMEs and Startups, and the Ministry of Trade, Industry and Energy, announcing these measures as part of the "New Government Economic Growth Strategy." The government changed the name of its economic policy direction, previously announced twice a year, to the Economic Growth Strategy and unveiled its first economic roadmap under the new administration.

Expanded Eligibility for Refinancing Loans with Lower Interest Rates

The government included support measures for small business owners in the New Government Economic Growth Strategy. To reduce financial costs, the Small Enterprise and Market Service (SEMAS) will expand both the eligibility and the loan limit for refinancing loans, which allow borrowers to switch from high-interest or hard-to-renew loans to low-interest loans. Previously, only loans taken out before July 3 last year were eligible, but from now on, loans taken out up to this past June will also be included. The household loan limit will be raised from 10 million won to 50 million won.

An official from the Ministry of Economy and Finance stated, "Since last year, SEMAS has been operating a refinancing loan program that converts high-interest loans above 7% to a fixed rate of 4.5%, and this time, we are expanding the eligibility criteria. Many small business owners take out household loans in addition to business loans, so we have increased the household loan limit to match that of business loans." The official added, "This is scheduled to be implemented in the second half of the year."

To strengthen policy fund repayment extensions, the government will increase the long-term installment repayment period from five years to seven years. Additionally, small business owners affected by the COVID-19 pandemic who faithfully repay their loans will be eligible for a special program that reduces their interest rate by one percentage point.

The regional credit guarantee foundations will provide a total of 8 trillion won in conversion guarantees for small business owners by 2027. The refinancing program, which previously only supported household loans, will be expanded to include loans for sole proprietors as well. Regarding this, another official from the Ministry of Economy and Finance stated, "It is expected to be implemented in the first half of next year."

The government will also ease the burden of early termination penalties and other costs arising from the use of restaurant technology such as kiosks and table order systems. Unfair contract terms will be corrected, and standard contract terms will be established and promoted. Additionally, a plan to rationalize payment gateway fees for unmanned ordering devices will be prepared in the fourth quarter.

The maximum deductible contribution for the Yellow Umbrella Mutual Aid Fund (a mutual aid system operated by the Korea Federation of SMEs) will be raised from 3 million won per quarter to 18 million won per year by the first half of next year.

Support for SMEs Facing Unfair Trade and Technology Theft

Policies to support small and medium-sized enterprises (SMEs) are also included in the Economic Growth Strategy. To address unfair trade between large corporations and SMEs, the government will introduce the authority to order the submission of materials to the Fair Trade Commission and the Ministry of SMEs and Startups in the second half of the year. When filing for damages due to technology theft, if the court requests, the two agencies will be required to submit materials from the offending company. The aim is to address the issue where defendants request the agencies to keep materials confidential due to trade secrets, making it difficult for plaintiffs to use the materials they have obtained.

Regarding technology theft, the government will strengthen compensation to ensure sufficient damages for victims. The standard for calculating damages, which serves as the basis for punitive damages, will be made more realistic. The government also plans to develop standard guidelines for calculating damages.

To enhance the effectiveness of the supply price indexation system, energy costs such as electricity and gas will also be included as items subject to indexation. The supply price indexation system adjusts supply prices when the main raw material prices for supplied goods change by a certain margin. Previously, only "raw materials" were subject to indexation, but going forward, energy costs will also be included.

Additionally, to provide swift relief for SMEs and small business owners harmed by unfair trade, civil remedies for unfair practices (injunction lawsuits) will be strengthened. The scope of those who can directly file for an injunction in court, without going through the Fair Trade Commission, will be expanded to include unfair practices under the Subcontracting Act, Franchise Act, Distribution Act, and Agency Act.

The "AI Specialized Joint Training Center," which will support training for SME employees by leveraging large corporations' AI infrastructure and capabilities, will be established in the first half of next year. The government will also work to discover promising SMEs and venture companies through AI competitions and increase various investments. By promoting the use of AI and scaling up investments, the government aims to support productivity improvements for SMEs.

The range of participants in the performance-sharing system, which distributes the results of collaborative activities between large corporations and SMEs, will be expanded from only contractors and subcontractors to include platforms, distribution, and IT service companies. The government also plans to enhance the Win-Win Growth Index as a key indicator of corporate credibility and image by expanding its evaluation targets to banks, online platforms, and more, and by upgrading the index itself.