Beauty Businesses and Kids Cafes to Receive Compensation for Losses

Expanding Target Industries to 900,000... Support for Revenue Loss Starting Next Month
Quarterly Minimum Increased from 100,000 KRW to 500,000 KRW

Minister Kwon Chil-seung of the Ministry of SMEs and Startups is holding a government joint briefing on support measures for small business owners and self-employed workers following the implementation of strengthened quarantine measures at the Government Seoul Office Joint Briefing Room on the morning of the 17th. On the left is Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance. Photo by Yonhap News Agency

[Asia Economy Reporters Jonghwa Kim, Heeyoon Kim, Sunhee Son] The government’s announcement of a prompt plan to provide quarantine support funds to small businesses and self-employed individuals affected by strengthened COVID-19 prevention measures reflects the seriousness of the situation. The government has expanded the scope of loss compensation to include 120,000 additional businesses such as beauty salons and kids cafes, increasing the total to about 900,000 locations. The minimum quarterly payment amount will also be raised from 100,000 KRW to 500,000 KRW.

On the 17th, Kwon Chil-seung, Minister of SMEs and Startups, announced at the Government Seoul Office alongside Prime Minister Kim Boo-kyum and Deputy Prime Minister Hong Nam-ki the "Support Plan for Small Business Owners and Self-Employed Due to Strengthened Quarantine Measures," stating, "Separate from loss compensation, we will quickly provide quarantine support funds of 1 million KRW each to 3.2 million small businesses and self-employed enterprises affected by the strengthened quarantine measures, totaling 3.2 trillion KRW."

The primary recipients are small business owners subject to operating hour restrictions. The Ministry of SMEs and Startups plans to finalize the first database of quarantine support fund recipients next week using the current list of loss compensation recipients and aims to swiftly distribute the funds within this year.

General businesses experiencing revenue decline will also receive support starting January next year. The scope of loss compensation will be expanded to include about 900,000 businesses such as beauty salons, first birthday party specialty stores, and kids cafes. The minimum quarterly loss compensation amount will be increased from 100,000 KRW to 500,000 KRW.

The total budget prepared for the three major support packages for small business owners, including the 1 million KRW quarantine support fund, amounts to 4.3 trillion KRW. Separately, related measures such as the "1% ultra-low interest loan support of 20 million KRW" reflected in next year’s budget will also be executed as quickly as possible.

Financial support and facility use vouchers worth 4.6 trillion KRW will also be provided for cultural and sports facilities, among others. Additionally, to aid the recovery of local neighborhood markets, local love gift certificates and Onnuri gift certificates will be issued on a scale of 33.5 trillion KRW.

Earlier, the Ministry of SMEs and Startups had disbursed loss compensation totaling 2.4 trillion KRW under the amended "Small Business Protection and Support Act" (Loss Compensation Act), which passed the National Assembly in July.

Until now, loss compensation for small businesses and self-employed individuals economically impacted by quarantine measures has been uniformly compensated up to 80% of the damage amount, with a quarterly compensation cap of 100 million KRW and a minimum payment of 100,000 KRW.

For small business owners not eligible for loss compensation due to "personnel and facility operation restrictions" rather than business suspension or operating hour restrictions, special loans totaling 2 trillion KRW are being provided at an ultra-low interest rate of 1% up to 20 million KRW across 100,000 business types.

Disaster relief funds exclusively for small business owners have also been provided. To date, approximately 16 trillion KRW has been distributed in four rounds, including △New Hope Fund (2.7633 trillion KRW, 2.51 million recipients) △Support Fund (4.2181 trillion KRW, 3.01 million recipients) △Support Fund Plus (4.8413 trillion KRW, 2.91 million recipients) △Hope Recovery Fund (4.231 trillion KRW, 1.894 million recipients).

The exact criteria and timing for the newly announced quarantine support fund are still being coordinated. The Ministry of SMEs and Startups stated that after consultations with financial authorities, specific sales criteria and payment schedules will be announced next week.

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