Ministry of SMEs confirms 6.193 trillion won in 2nd supplementary budget... Additional 1.3554 trillion won secured for small business support

Hope Recovery Fund, Support Amount Detailed Reflecting Damage Level by Business
Rental Loan Limit Raised to 10 Million Won for Businesses Under Gathering Ban or Operation Restrictions

As social distancing measures in the Seoul metropolitan area are being extended due to a surge in COVID-19 cases, the Myeongdong area in Jung-gu, Seoul, remains quiet even on holidays. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Heeyoon] The Ministry of SMEs and Startups announced on the 26th that the second supplementary budget for this year has been finalized at 6.193 trillion KRW, an increase of 1.3554 trillion KRW from the original government proposal of 4.8376 trillion KRW.

During the National Assembly’s supplementary budget review process, the Ministry of SMEs and Startups increased the budget for small business damage support by 1.3771 trillion KRW to provide broad and substantial assistance, considering the surge in COVID-19 cases and the elevation of social distancing levels. Some projects were reduced due to urgency considerations.

First, through the Hope Recovery Fund, loss compensation, and emergency loans, the ministry plans to provide substantial, broad, and prompt support to small business owners who have suffered cumulative damage due to the prolonged COVID-19 pandemic.

The Small Business Hope Recovery Fund has been segmented by support type and amount, reflecting the level and duration of quarantine measures and the size of the business to address the degree of damage per business.

Businesses complying with gathering bans will receive support ranging from 3 million KRW up to a maximum of 20 million KRW, while those complying with business restrictions will receive from 2 million KRW up to 9 million KRW. Industries with a sales decline rate of 10% or more have been designated as management crisis industries and will receive up to 4 million KRW.

Considering the worsening difficulties faced by small business owners due to the prolonged COVID-19 situation and recent strengthening of social distancing, payments will begin promptly from the 17th of next month. Priority payments will be made to 1.3 million people, representing 70% of the total support target, with the remainder paid starting from the end of August.

The loss compensation system includes 1.0263 trillion KRW in this supplementary budget for compensation of losses from July to September this year. An additional 403.4 billion KRW was added considering the recent elevation of social distancing levels.

The Loss Compensation Deliberation Committee will be held on October 8, when the law takes effect, to finalize specific compensation calculation criteria and payment methods. Detailed guidelines will be announced in mid-October, followed by the start of compensation applications. Compensation, calculated in a customized manner according to the scale of losses, is expected to be paid from the end of October.

Emergency loans totaling 6 trillion KRW for specially affected industries and small business owners with low to medium credit will be supplied promptly in August, with reduced interest rates and guarantee fees to ease the burden.

The scale of the ‘Low-Credit Small Business Loan,’ which offers ultra-low interest rates of 1.5% for loans up to 10 million KRW to low-credit small business owners in gathering ban, business restriction, and management crisis industries, has been expanded by 200 billion KRW to 1.2 trillion KRW. The loan limit for rent support targeting small business owners in gathering ban, business restriction, and management crisis industries will increase from 10 million KRW to 20 million KRW, and the guarantee fee rate required for rent loans will be further reduced (from 0% in year 1 and 0.6% in years 2?5 to 0% in years 1?2 and 0.4% in years 3?5).

Additionally, a special guarantee of 1 trillion KRW will be implemented through regional credit guarantee foundations for small business owners with low to medium credit operating in general industries experiencing sales declines.

For small enterprises and small business owners in gathering ban and restricted industries newly subscribing to the Yellow Umbrella Mutual Aid, monthly support of up to 40,000 KRW (50% national and 50% local government funding) will be provided (national funding of 12.4 billion KRW).

The small business closure support fund (500,000 KRW) program will be extended until the end of the year, and the existing bridge guarantee scale will be expanded from 500 billion KRW to 600 billion KRW. Furthermore, to alleviate closure-related costs, a one-stop support project including debt adjustment, consulting, and demolition costs will be implemented starting in August.

An additional issuance of 150 billion KRW worth of Onnuri gift certificates will be sold with special discounts during promotional events such as the ‘Traditional Market Autumn Festival’ scheduled for October to November.

Alongside this, a fund formation project will be announced in August to create a 610 billion KRW fund with a 270 billion KRW contribution from the Korea Fund of Funds. Support for overseas expansion of SMEs and startups, including local acceleration and export voucher support to ease logistics burdens, will also be implemented immediately.

Moreover, loans and commercialization support for youth startups and regional-based startups will be provided concurrently, aiming to foster promising SMEs and startups and create jobs.

Minister Kwon Chilseung of the Ministry of SMEs and Startups stated, “This supplementary budget focuses on providing swift and substantial support to small business owners suffering from the prolonged COVID-19 pandemic, while also promoting the growth of SMEs and startups to revitalize the economy. We will thoroughly prepare to ensure that this supplementary budget is promptly delivered to small business owners facing severe management crises due to COVID-19.”

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