Implementation of Preferential Support for SMEs and Small Business Owners in Special Disaster Areas

Implementation of Preferential Measures Including Expansion of Guarantee Limits, Reduction of Guarantee Fees, Lower Loan Interest Rates, and Extension of Repayment Periods

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) announced on the 7th that it will expand support for small and medium-sized enterprises (SMEs) and small business owners affected by flooding and other damages following the declaration of special disaster zones in Anseong-si, Gyeonggi Province; Cheorwon-gun, Gangwon Province; Chungju-si, Jecheon-si, and Eumseong-gun, Chungbuk Province; and Cheonan-si and Asan-si, Chungnam Province.

First, for SMEs, the Ministry will implement an increase in the special guarantee ratio (from 85% to 90%), preferential guarantee fees (from 0.5% to 0.1%, applying a fixed guarantee fee rate), and an expansion of the guarantee limit (working and facility funds from 300 million KRW to 500 million KRW for working capital, and facility funds within the required amount). Additionally, all maturing guarantees will be fully extended to alleviate the burden on affected companies.

Policy funds for SMEs will be provided up to 1 billion KRW per affected company at an interest rate of 1.9%, and when executing SME loans, the 'Ambulance Man System' will be utilized to ensure rapid fund disbursement within 7 business days by dedicated staff.

Preferential financial support measures will also be implemented for small business owners. First, special guarantees for small business owners will include an increase in the special guarantee ratio (from 85% to 100%) and preferential guarantee fees (from 0.5% to 0.1%, applying a fixed guarantee fee rate). Despite existing guarantee amounts, the guarantee limit will be expanded up to a maximum of 200 million KRW.

Interest rates on small business policy funds (emergency management stabilization funds) will be reduced (from 2.0% to 1.5%), and repayment periods extended (from 2 years grace and 3 years repayment to 3 years grace and 4 years repayment). Support will also be extended to some industries previously excluded from policy fund loans, such as healthcare and veterinary services, thereby broadening the scope of loan recipients.

Furthermore, a win-win cooperation initiative will be promoted by connecting Samsung Electronics and LG Electronics with traditional markets to support repair and inspection of flood-damaged home appliances. A task force composed of the affected market merchant associations and the Small Enterprise and Market Service will quickly assess appliance damage and submit it to the relevant regional service centers, where affected parties will receive benefits such as free on-site visits, repair services, and discounts on parts.

To provide prompt support to affected companies, a 'Comprehensive Support Team' consisting of local SME office staff and related agency personnel will be established at local SME offices. 'Dedicated Support Centers' will also be set up at regional headquarters (centers) of the Korea SMEs and Startups Agency, Small Enterprise and Market Service, Korea Technology Finance Corporation, and Korea Credit Guarantee Fund. Companies wishing to apply for special guarantees or loans should report damage to the city, county·district (or eup·myeon·dong) and obtain a disaster confirmation certificate from the local government, then submit it to the loan or guarantee handling institution to receive financial support necessary for recovery.

SMEs can apply for disaster funds with a disaster confirmation certificate through the Korea SMEs and Startups Agency to receive loan support, or apply for special guarantees through the Korea Technology Finance Corporation (or Korea Credit Guarantee Fund) to receive funding. Small business owners requiring guarantees can obtain a disaster SME (small business owner) confirmation certificate from the local government, then visit the regional credit guarantee foundation to apply for and receive a special guarantee certificate, and apply for loans at banks to receive funding (up to 200 million KRW per company, with a 0.1% guarantee fee).

For detailed inquiries regarding damage reports and financial support, contact the Ministry’s integrated call center at 1357 or the 'Dedicated Support Centers' established at each local SME office and related agencies.

This content was produced with the assistance of AI translation services.