Seoul City Provides 2 Billion KRW Emergency Loan to Food Service Self-Employed with Fixed Interest Rate of 1% per Annum

Emergency Operating Fund Loans for General and Rest Area Restaurants and Bakeries Begin, Applications Accepted from the 7th
Support for Operating Expenses such as Labor Costs and Rent... 2-Year Grace Period, 3-Year Installment Repayment, Up to 20 Million KRW per Business

[Image source=Yonhap News]

[Asia Economy Reporter Lim Cheol-young] The Seoul Metropolitan Government is launching a ‘COVID-19 Emergency Operating Fund Loan’ utilizing the ‘Food Promotion Fund’ to support self-employed restaurant operators struggling with fixed costs such as labor and rent due to the prolonged COVID-19 pandemic.

According to Seoul on the 3rd, the city will start accepting applications from the 7th to provide low-interest loans at an annual rate of 1%, with a total fund size of 2 billion KRW and a maximum of 20 million KRW per business. The Food Promotion Fund is established by cities and provinces under the Food Sanitation Act to be used for projects aimed at ‘food hygiene and improving the nutritional level of the public.’

The newly established ‘COVID-19 Emergency Operating Fund Loan’ significantly expands the scope of use to cover essential operating expenses such as labor costs, rent, and facility management and operation funds needed by restaurant self-employed operators who are facing difficulties due to COVID-19.

Seoul explained, "With the revision of related laws and notifications to allow operating funds to be supported through the Food Promotion Fund in the event of a disaster, we are now able to start the ‘COVID-19 Emergency Operating Fund Loan.’"

As the COVID-19 pandemic prolongs, the burden of fixed costs such as labor and rent has intensified for self-employed restaurant operators in Seoul. The city expects that this ‘COVID-19 Emergency Operating Fund Loan’ will provide some relief to these self-employed individuals.

The support targets ‘food service establishments’ operating general and casual restaurants and bakeries within Seoul. There are no separate income eligibility restrictions. Support is provided up to 20 million KRW per business (up to 100 businesses). However, businesses that received loans through the Seoul Small and Medium Business Promotion Fund in 2021 or those that opened or succeeded their status after April this year are excluded.

The loan carries a fixed interest rate of 1% per annum, with repayment terms of a 2-year grace period followed by 3 years of equal installments. For a 20 million KRW loan, it is expected that borrowers can save about 1 million KRW in financial costs over 5 years compared to loans from commercial banks.

Food self-employed operators wishing to apply for the emergency operating fund can do so from the 7th at the food sanitation department of the local district office where their business is located. The application process is simplified, requiring only the loan application form, copies of the business registration certificate and business license, and a consent form. Once confirmed as a loan recipient, the loan will be finalized according to the credit management regulations of Woori Bank, Hana Bank, and IBK Industrial Bank, which handle the Food Promotion Fund. Seoul plans to expand the loan scale next year to support more than 1,000 businesses.

Meanwhile, Seoul also provides various loan funds to small and medium enterprises and small business owners, including food self-employed operators, through the ‘Small and Medium Business Promotion Fund.’

Park Yumi, Director of the Citizen Health Bureau, said, “We are promoting the expansion of fund loans through extensive deliberation to help food self-employed operators overcome the crisis and normalize their business amid the prolonged COVID-19 pandemic. Seoul will continue to listen carefully to the opinions of food-related professional organizations and businesses to implement support policies for food self-employed operators.”

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