Compensation for Small Business Losses in Q1, Applications and Payments Start from the 30th

Resolution of '2022 Q1 Compensation Standards' at the Loss Compensation Deliberation Committee on the 3rd
Expansion from existing small business owners and small enterprises to medium-sized enterprises with annual sales under 3 billion KRW

Joo Joo-hyun, Vice Minister of the Ministry of SMEs and Startups, is delivering a greeting at the 17th Loss Compensation Deliberation Committee held on the 3rd at the Win-Win Growth Committee in Jung-gu, Seoul.

[Asia Economy Reporter Kim Cheolhyun] The Ministry of SMEs and Startups (Minister Lee Young, hereinafter referred to as the Ministry) announced on the 3rd that it held the 17th Loss Compensation Deliberation Committee and approved the '2022 1st Quarter Loss Compensation Standards.'

This compensation standard reflects the results of the 2nd supplementary budget for 2022 passed by the National Assembly on May 29 and has strengthened the compensation level to cover the accumulated losses caused by COVID-19 quarantine measures. Based on the deliberation results, the Ministry plans to announce the '2022 1st Quarter Loss Compensation Standards, etc.' for administrative notice and will begin accepting applications and payments from the 30th, when the preparation for pre-estimation and verification of loss compensation funds and system construction is finally completed.

The 1st quarter loss compensation targets are businesses classified as small and medium enterprises under the 'Framework Act on Small and Medium Enterprises' with annual sales of 3 billion KRW or less, which have suffered significant business losses due to compliance with gathering bans, business hour restrictions, and facility capacity limits from January 1 to March 31 of this year. From the 1st quarter of this year, medium-sized enterprises that have suffered losses by complying with the same quarantine measures as small business owners and small enterprises are also included in the compensation targets. However, to prevent the concentration of loss compensation funds on medium-sized enterprises with relatively large sales, compensation will only be paid to medium-sized enterprises with annual sales of 3 billion KRW or less.

The compensation calculation method applies the same formula as the 4th quarter of last year, which calculates the average daily loss in 2022 compared to the same month in 2019, when there was no COVID-19 impact, multiplied by the quarantine measure implementation period and adjustment rate. However, the adjustment rate has been raised and the minimum amount increased compared to the previous quarter to enhance loss compensation. By raising the adjustment rate to 100% to calculate damages directly caused by quarantine measures, small business owners who complied with the government's direct quarantine measures can receive full compensation for losses incurred during the period. The quarterly minimum amount has also been raised from 500,000 KRW to 1,000,000 KRW. This is expected to be especially helpful for small-scale small business owners whose compensation amounts might be small due to their sales size.

In cases where advance payments for loss compensation were received for January to March, the amount will be deducted from the 4th quarter 2021 compensation, and any remaining advance payment will be further deducted from the 1st quarter compensation this time. If there is still an outstanding advance payment after the deduction, the remaining amount will be converted into a 1% ultra-low interest loan according to the agreement signed at the time of advance payment. For businesses whose compensation amount has changed, the difference will be additionally paid or offset.

The 1st quarter loss compensation will be promoted to allow applications and payments to be made online as quickly and conveniently as possible, just like the past two quarters, with applications starting from the 30th. Cho Joohyun, Deputy Minister of the Ministry, stated, "The 2022 1st quarter loss compensation focuses on fully compensating the losses of self-employed people who have accumulated damage due to COVID-19 quarantine measures," and added, "We will do our best to prepare for swift and flawless execution to minimize inconvenience and difficulties in the field during the payment process."

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