Compensation up to 10 million KRW for losses... "Notification text at 12 PM today, payment from 3 PM"

Q&A on Loss Compensation Payment by Ministry of SMEs and Startups
Support Benefits Starting with 3.48 Million Rapid Payment Targets
"Payment Eligibility Requires Meeting Sales Decline Criteria"

Asia Economy DB=Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Bo-kyung] The government will send notification texts starting today (30th) at 12 PM to 3.48 million businesses eligible for the rapid payment of loss compensation funds. For 1.61 million businesses with even-numbered business registration numbers, the support funds are expected to be deposited starting at 3 PM today.

The Ministry of SMEs and Startups announced that from the 30th, it will disburse loss compensation funds worth 23 trillion KRW to small business owners. This is the largest amount ever, accounting for 73% of the total disaster relief funds paid seven times since 2020, and will support 3.71 million businesses.

Below is a Q&A regarding the eligibility, amount, and procedures for the loss compensation funds.

- Who is eligible for the loss compensation payment?

▲ Eligible recipients are small business owners and small enterprises that opened before December 15 of last year and were operating as of December 31 of that year, with decreased sales, or medium-sized enterprises with annual sales exceeding 1 billion KRW but not exceeding 5 billion KRW.

Restaurants, cafes, academies, and indoor sports facilities with annual sales exceeding 3 billion KRW but not exceeding 5 billion KRW, which were previously ineligible for disaster relief funds, are newly included.

- How is eligibility determined based on sales decline?

▲ Sales decline is assessed by comparing VAT-reported sales for the full year or half-year periods between 2019 and 2020 or 2021, or between 2020 and 2021.

If it is not possible to determine annual or half-year sales decline using VAT-reported sales, tax infrastructure data is used to compare half-year or monthly average sales.

Therefore, even if a business received the first or second round of quarantine support funds, it may not be eligible for loss compensation if it does not meet the sales decline criteria.

However, businesses that received the first or second round of quarantine support funds and complied with quarantine measures such as operating hour restrictions after August 16, 2020, will receive a basic amount of 6 million KRW in consideration of the operational constraints.

If a business has no VAT-reported sales or tax infrastructure sales for 2020 and last year, making it difficult to consider it as operating, it may be excluded from eligibility.

- How much is the loss compensation payment?

▲ Payments are divided into nine tiers based on each business’s sales scale and sales decline rate, with a minimum of 6 million KRW and a maximum of 8 million KRW.

For 50 industries including travel businesses with a sales decline rate of 40% or more, and medium-sized enterprises with annual sales not exceeding 5 billion KRW that complied with quarantine measures, support is increased to between 7 million and 10 million KRW.

- When can the loss compensation funds be received?

▲ The application period for loss compensation funds is about two months, from 12 PM on the 30th until July 29.

The Ministry of SMEs and Startups pre-selected 3.48 million eligible businesses using the previous disaster relief fund database. Rapid payment will begin immediately upon application starting today.

For 230,000 businesses requiring separate document verification, such as those with co-representatives or medium-sized enterprises with annual sales not exceeding 5 billion KRW, 'verification payments' will begin from the 13th of next month.

- When can applications for loss compensation funds be submitted?

▲ The Ministry will send notification texts to the 3.48 million rapid payment eligible businesses starting at 12 PM on the 30th.

To minimize confusion from simultaneous access, notifications will be sent sequentially: 1.61 million businesses with even-numbered business registration numbers today, and 1.62 million with odd numbers tomorrow (31st).

For the first two days, applications can only be submitted on the designated day according to the odd-even system, and from the third day, July 1, applications can be submitted regardless of odd or even numbers.

Representatives of 250,000 businesses managing multiple establishments can apply following the notification text sent from July 2.

Loss compensation payments will be executed under the principle of 'same-day payment upon application' and 'six payments per day.'

If an application is submitted by 7 PM, the support funds will be deposited on the same day. On the first payment day, the 30th, payments will start from 3 PM.

- How can one apply for the loss compensation funds?

▲ Applications can be submitted 24/7 regardless of weekends or holidays through the loss compensation fund website (소상공인손실보전금.kr). The website can also be accessed by searching 'Small Business Loss Compensation Fund' or 'Loss Compensation Fund' on portal sites like Naver or Daum.

Eligible businesses should access the website and apply according to the schedule indicated in the notification text. Those who did not receive a text can check their eligibility on the website according to the application schedule.

Rapid payment applicants can complete the application through simple steps such as entering the business registration number, identity verification, and bank account information. Verification payment applicants must additionally submit documents such as a power of attorney for co-representatives.

For identity verification, individual business owners can choose among their personal mobile phone, joint certificate, or simple authentication, while corporate businesses must prepare a corporate joint certificate.

Detailed eligibility criteria and application procedures can be found on the loss compensation fund website or the Ministry of SMEs and Startups website announcements, and assistance is available through the dedicated loss compensation fund call center.

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