Director Lee Eun-cheong: "Loss Compensation Fund Sales Criteria Unavoidable for Prompt Payment"

Euncheong Lee, Head of the COVID-19 Recovery Support Team for Small Business Owners at the Ministry of SMEs and Startups, held a press briefing on the 17th at the Korea Federation of SMEs in Yeouido, Seoul.

[Asia Economy Reporter Donghyun Choi] "Selecting small business owners eligible for loss compensation payments based on sales rather than operating profit was an unavoidable choice to quickly provide large-scale support funds."

Lee Eun-cheong, head of the Small Business COVID-19 Recovery Support Team at the Ministry of SMEs and Startups, stated this at a press conference held on the 17th at the Korea Federation of SMEs in Yeouido, Seoul. She explained, "Considering the limited financial resources, we had no choice but to select and support businesses that were even slightly struggling," adding, "Whether sales increased or decreased is the most objective and quickly ascertainable indicator of damage."

Disaster relief funds (quarantine support funds) for small business owners affected by COVID-19 have been provided a total of eight times so far. Starting with the 1st Emergency Employment Stability Support Fund in July 2020, followed by the New Hope Fund (September 2020), the Buffer Fund (January 2021), Buffer Fund Plus (March 2021), Hope Recovery Fund (August 2021), 1st Quarantine Support Fund (December 2021), 2nd Quarantine Support Fund (February 2022), and currently the Loss Compensation Fund (May 2022) is being distributed.

Lee said, "Since the Loss Compensation Fund was being prepared since the transition team period, we were able to start payments immediately from the day after the 2nd supplementary budget passed in the National Assembly on the 29th of last month," adding, "As of the day before, about 90% of the total budget, 20.6 trillion won, has been paid out."

She also actively addressed the controversy over the 'blind spots' in the Loss Compensation Fund payment process. Regarding the claim that the payment criteria should be based on operating profit rather than sales, Lee said, "Calculating the operating profit of each individual business for payment would require enormous administrative costs and time," and added, "If damage is judged based on a decrease in operating profit, it would also be necessary to consider whether to support businesses whose sales have decreased but operating profit has increased."

Regarding the claim to abolish the closure date criterion (December 31, 2021), Lee emphasized, "All disaster relief funds implemented so far have had a closure date criterion," and added, "Setting a closure date criterion is unavoidable to ensure fair distribution of disaster relief funds."

On the demand for disaster relief funds for excluded sectors such as real estate rental businesses or medical, legal, and accounting services, Lee explained, "These sectors are either high-income earners or relatively advantaged in financing, making it difficult to support them with limited resources," but added, "However, even for excluded sectors, entertainment bars and similar businesses that complied with direct government quarantine measures such as gathering bans or business restrictions are being supported."

Lee stated, "From the 30th of this month, we plan to proceed with applications and payments for the '1st quarter 2022 Loss Compensation Fund,'" and added, "We are currently working on identifying eligible recipients and calculating compensation amounts and will carry out the process without any setbacks."

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