Up to 10 Million KRW Additional Loans for Small Business Owners in Restricted Sectors Next Year

On the 20th, while the social distancing level 1.5 to prevent the spread of the novel coronavirus infection is in effect, a small business owner is delivering food on Myeongdong Street in Seoul. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Jo Gang-wook] Small business owners renting premises in restricted gathering industries such as restaurants and cafes can now receive an additional loan of up to 10 million KRW. This is a newly established financial support program for small business owners in response to the third wave of the novel coronavirus infection (COVID-19).

On the 29th, the Financial Services Commission announced the establishment of a special support program that provides an additional loan of up to 10 million KRW to small business owners renting premises in restricted gathering industries, regardless of whether they have used existing small business financial support programs.

This program offers a loan with a 2-year grace period and a 3-year installment repayment plan. The first year is exempt from guarantee fees, and from the following year up to the fifth year, a low guarantee fee rate of 0.6% is applied.

This is at the same interest rate level as the second small business financial support program, and the banks are currently reviewing measures to voluntarily lower the interest rate ceiling.

The support targets small business owners renting premises in restricted gathering industries. Restricted gathering industries include five types under social distancing level 2: restaurants and cafes, indoor sports facilities, karaoke rooms, direct sales promotion centers, and standing performance venues.

Additionally, under social distancing level 2.5+α, the 11 applicable industries include restaurants and cafes, beauty and hair salons, PC rooms, arcades and multi-rooms, study cafes, movie theaters, amusement parks, large marts and department stores, and lodging businesses.

The Financial Services Commission is preparing to start loan applications around January 18 next year, when practical preparations such as bank IT system setup are completed. Detailed information regarding the loan implementation will be separately announced once preparations are finalized.

Small business owners renting premises in restricted gathering industries can apply for up to 10 million KRW regardless of their use of existing financial support programs. They can also apply simultaneously with the existing second small business financial support program, and the order of use does not matter.

This loan can be applied for at bank branch counters. Applications are accepted at 6,121 branches nationwide of 12 commercial and regional banks currently handling the second small business financial support program.

Non-face-to-face application channels via each bank’s website and app are also available. Among the 12 commercial and regional banks, 9 banks allow non-face-to-face applications through their websites and apps, and 5 of these banks offer non-face-to-face loan approval as well.

Applicants need to submit six documents: business registration certificate, VAT taxable standard certificate, national and local tax payment certificates, real estate registry copy (or lease contract), and income amount certificate.

However, additional documents and procedures required to verify eligibility as a small business owner renting premises in restricted gathering industries will be guided after consultation with related ministries and agencies when detailed information is disclosed.

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