4 out of 10 Small Businesses Face Funding Difficulties for Lunar New Year... 96% Due to COVID-19

Korea Federation of SMEs Announces 'Seol Fund Demand Survey' Results for 860 Companies
"Will Pay Bonuses" at 36.7% of SMEs... Down 13.4%p from Last Year

Asia Economy DB=Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Bo-kyung] Four out of ten small and medium-sized enterprises (SMEs) are struggling with funds for the Lunar New Year. 96% responded that the COVID-19 pandemic has affected their financial situation.

The Korea Federation of SMEs recently announced on the 27th the results of the '2021 SME Lunar New Year Fund Demand Survey' conducted on 860 SMEs.

The survey showed that 38.5% of SMEs are having difficulty securing funds for the Lunar New Year.

The reasons for financial difficulties were ▲poor sales/revenue (89.7%) ▲rising raw material prices (36.0%) ▲increased labor costs (18.4%) ▲delayed collection of sales proceeds (14.8%) in that order.

Regarding financial difficulties, 96.1% responded that "COVID-19 has had an impact."

SMEs need an average of 214.93 million KRW in funds for this year's Lunar New Year.

As for methods to secure insufficient funds, respondents planned ▲early collection of delivery payments (45.0%) ▲deferred payments (42.1%) ▲borrowing from financial institutions (40.0%), but 10.7% said they have 'no countermeasures.'

The percentage of SMEs planning to pay Lunar New Year bonuses (in cash) this year was 36.7%, down 13.4 percentage points from last year (50.1%).

For fixed-amount payments, the average per person was 482,000 KRW, a decrease of 142,000 KRW compared to last year's Lunar New Year (624,000 KRW). For fixed-rate payments, respondents said they would pay 60.1% of the base salary.

Regarding Lunar New Year holiday plans, 96.0% of companies responded that they would take four days off.

Choo Moon-gap, Head of the Economic Policy Division at the Korea Federation of SMEs, stated, "Due to the direct hit from COVID-19, such as poor sales and weakened consumer sentiment, SMEs are complaining about difficulties in financing more than ever."

He added, "In the overall economic downturn, special attention and support measures from policy institutions and the financial sector are necessary to ensure smooth funding for SMEs during the Lunar New Year."

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