Emergency Damage Support Package for Small Businesses and SMEs: 3.8 Trillion KRW for 3.77 Million People

On the 21st of last month, as the new coronavirus infection (COVID-19) resurged, increasing difficulties for small business owners, a merchant was seen unloading goods at the Goyang Furniture Complex in Gyeonggi Province. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Chaeseok] The government will provide emergency support amounting to 3.8 trillion KRW to 3.77 million small business owners and small and medium-sized enterprises (SMEs) affected by the resurgence of COVID-19.

On the 10th, the government held an extraordinary Cabinet meeting and approved a 7.8 trillion KRW 4th supplementary budget bill. Emergency support for small business owners and SMEs is one of the four major packages included in the supplementary budget.

◆ PC Bangs, indoor group exercise facilities, etc... 150,000 small business owners in prohibited gathering industries receive 2 million KRW each

First, to stabilize the management of small business owners, 3.2 trillion KRW will be provided as the 'Small Business New Hope Fund.' This will support 2.91 million small business owners, accounting for 86% of all small business owners.

For 2.43 million small business owners in general industries with annual sales under 400 million KRW who experienced a decrease in sales after the COVID-19 resurgence, a total of 100 million KRW in management stabilization funds will be provided, with 2.4 trillion KRW allocated for this purpose.

For 150,000 small business owners in prohibited gathering industries such as nationwide PC Bangs, intense indoor group exercise facilities, and academies, reading rooms, and indoor sports facilities in the metropolitan area, 2 million KRW in management stabilization funds will be provided. A budget of 300 billion KRW has been allocated.

For 323,000 small business owners in restricted gathering industries such as restaurants and coffee shops in the metropolitan area that face operating hour restrictions, 1.5 million KRW in management stabilization funds will be provided. 500 billion KRW will be invested for this.

Management stabilization funds will be provided to prohibited and restricted gathering industries regardless of sales amount (over 400 million KRW) or sales decline.

The government will simplify the support procedures by maximizing the use of administrative information from the National Tax Service and the National Health Insurance Corporation so that most small business owners can receive support quickly without submitting separate documents.

A 'Closed Store Rechallenge Incentive' policy will be implemented, providing 500,000 KRW each to 200,000 closed small business owners to support employment and re-startup preparations. A budget of 100 billion KRW has been allocated.

Rapid execution of 10.3 trillion KRW in 1st and 2nd stage financial support for 590,000 small business owners will be carried out.

In the 1st stage program, 9,000 small business owners mainly in academies, PC Bangs, and indoor group exercise industries will receive 10 million KRW each, totaling 900 billion KRW.

In the 2nd stage, the support limit will be increased from 10 million KRW to 20 million KRW to quickly execute the remaining 9.4 trillion KRW.

◆ SMEs focus on liquidity supply... 1.6 trillion KRW special loans for domestic companies and 0.9 trillion KRW for export venture companies

While the small business support policy emphasized 'management stabilization and recovery,' the SME support plan focuses on 'emergency liquidity supply.'

First, 'COVID-19 special credit loans' will be expanded by 2.5 trillion KRW for 8,000 companies.

The Korea Credit Guarantee Fund will additionally provide 1.6 trillion KRW in COVID-19 special credit loans to SMEs affected by domestic demand contraction in industries such as performance and tourism. Approximately 5,200 companies will receive loans averaging 305 million KRW each at an interest rate of about 2.8%.

The Korea Technology Finance Corporation will provide an additional 900 billion KRW in loans to technology SMEs such as export and venture companies. About 3,000 companies will receive loans averaging 305 million KRW each at an interest rate of 2.8%.

Emergency management stabilization funds will be loaned to 2,000 companies.

To resolve liquidity difficulties faced by SMEs severely affected by COVID-19, emergency management stabilization funds will be expanded by 300 billion KRW, totaling 1.3 trillion KRW.

An additional 200 billion KRW in policy funds will be provided to small-scale SMEs in general industries that have difficulty accessing bank loans. About 1,250 companies will receive an average of 160 million KRW at an interest rate of about 2.15%.

For about 1,000 SMEs subject to gathering prohibition orders, an ultra-low interest rate of 1.5% will be applied, supplying an average of 100 million KRW each, totaling 100 billion KRW.

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