[Loss Compensation] Application and Payment for Loss Compensation Starting from the 27th

Loss Compensation Deliberation Committee to be Held on the 8th, Expanding Compensation Targets from Small Business Owners to Small Enterprises
Uniform 80% Adjustment Rate Applied, Rapid Payment Within 2 Days After Application Without Document Verification Burden
Nationwide Loss Compensation Information Dedicated Service Centers Also Established

Minister Kwon Chil-seung of the Ministry of SMEs and Startups is taking a group photo before the Loss Compensation Deliberation Committee meeting. From the left, Lee Deok-jae, Chairman of External Cooperation of the National Merchants Federation; Kwon Chil-seung, Minister of the Ministry of SMEs and Startups; Kim Wan-soo, Executive Vice President of the Korea Federation of Micro Enterprises; Kang Sung-chun, Vice Minister of the Ministry of SMEs and Startups.
[Photo by Ministry of SMEs and Startups]

[Asia Economy Reporter Kim Jong-hwa] Compensation payments for losses suffered by businesses affected by COVID-19 quarantine regulations will be available for application and payment starting from the 27th, and the scope of compensation targets has been expanded from 'small business owners' to 'small enterprises.'

The compensation amount is calculated by applying the quarantine measure implementation period and a correction rate of 80% to the average daily loss amount in the same month of 2021 compared to 2019, when there was no impact from COVID-19. The upper limit for quarterly compensation is 100 million KRW, and the lower limit is 100,000 KRW.

The Ministry of SMEs and Startups held the 1st Loss Compensation Deliberation Committee on the 8th, the first day of the small business owner loss compensation system implementation, and resolved the '2021 3rd Quarter Loss Compensation Standards' with these details.

Based on the deliberation results, the Ministry announced an administrative notice on the '2021 3rd Quarter Loss Compensation Standards, etc.' After a 10-day notice period, once the notice is issued, applications and payments for loss compensation are expected to begin from the 27th.

Compensation Targets and Standards

The compensation targets are small enterprises that suffered significant business losses due to government-ordered gathering bans and business hour restrictions from the promulgation of the Small Business Owner Protection and Support Act (Loss Compensation Act) on July 7 until September 30.

Initially, the compensation target was limited to 'small business owners,' but the Deliberation Committee decided to expand the target to include small enterprises. This decision comprehensively considered that disaster relief funds are also provided to small enterprises and the legislative intent stipulated in the Small Business Owner Act regarding the loss compensation system.

Therefore, it is expected that compensation payments will be provided to a broader range of targets, including those who had closed their businesses and did not receive disaster relief funds, compensating losses incurred up until just before the closure date.

The compensation amount is calculated in a customized manner proportional to the individual business's loss amount. The loss compensation amount is calculated by applying the quarantine measure implementation period and correction rate to the average daily loss amount in the same month of 2021 compared to 2019, when there was no COVID-19 impact. When calculating the average daily loss amount, not only operating profit margin but also the proportion of labor costs and rent relative to sales will be fully reflected to provide more substantial compensation.

The compensation amount is calculated by multiplying the average daily loss amount, the number of quarantine measure implementation days, and the correction rate. The correction rate is uniformly applied at 80%, regardless of whether the measure was a gathering ban or business hour restriction. Sales decrease amount, operating profit margin, and other data necessary for compensation calculation will be objectively calculated using tax data for each business. The upper limit for quarterly compensation is 100 million KRW, and the lower limit is 100,000 KRW.

Compensation Application, Payment, and Dedicated Loss Compensation Information Desks

The Ministry of SMEs and Startups plans to enable small business owners to apply for and receive compensation as quickly and conveniently as possible through an online system. To this end, they will promote 'quick compensation' by pre-calculating compensation amounts using local government quarantine facility lists and National Tax Service tax data and providing rapid payments.

This is expected to significantly enhance convenience for small business owners by eliminating the burden of document submission and enabling rapid payment within two days after application. Furthermore, if applicants disagree with the amount calculated in quick compensation, they can submit additional supporting documents through 'verification compensation' to have the compensation amount recalculated. If they still disagree with the amount calculated through verification compensation, they can seek relief through an objection process.

Applications for compensation are scheduled to begin on the 27th via the loss compensation website (소상공인손실보상.kr). For those who find online application difficult, they can visit dedicated loss compensation desks at city, county, and district offices starting November 3 to apply.

Nationwide dedicated loss compensation information desks will also be established. By mid-October, over 300 dedicated desks will be set up nationwide at city, county, and district offices, regional offices of the Ministry of SMEs and Startups, and regional centers of the Small Enterprise and Market Service. To this end, regional loss compensation task forces have been formed, led by heads of regional offices of the Ministry of SMEs and Startups, with participation from local governments and the Small Enterprise and Market Service. Approximately 700 new administrative support personnel will be hired to staff these dedicated desks.

Additionally, from this day, the loss compensation call center (1533-3300) will provide guidance on loss compensation-related matters.

Minister Kwon Chil-seung of the Ministry of SMEs and Startups stated, "The small business owner loss compensation system is significant in that it establishes a predictable compensation system for small business owners who complied with gathering bans and business hour restrictions. In particular, legislating this as a compensation concept is a progressive system that is difficult to find similar cases overseas." He added, "We will concentrate administrative efforts to operate the loss compensation system smoothly and do our best to alleviate the difficulties faced by small business owners."

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