Get a Loan by Paying the Small and Medium Business Mutual Aid Contribution for Just One Month

Amendment to the Enforcement Decree of the
Small and Medium Enterprise Cooperative Act Approved by the State Council

The Ministry of SMEs and Startups announced on the 27th that the revised Enforcement Decree of the “Small and Medium Enterprise Cooperatives Act,” which includes key measures such as easing loan requirements for the SME Mutual Aid Fund, expanding the reasons for payment of the Yellow Umbrella Mutual Aid, and relaxing the qualification criteria for full-time directors of SME cooperatives, was approved at the Cabinet meeting. Accordingly, small and medium enterprises can now receive loans after joining the SME Mutual Aid Fund and making payments for more than one month. The Yellow Umbrella Mutual Aid can also be utilized in cases of temporary business crises.

This revision follows the amendment of the “Small and Medium Enterprise Cooperatives Act” on September 14 last year, which raised the amount of fines to strengthen supervision of SME cooperatives, and sets forth necessary delegated matters in the enforcement decree. It also includes some improvements needed for system operation.

First, the amount of fines was adjusted, such as increasing the fine for violations of the prohibition on concurrent positions by executives of SME cooperatives from 100,000 to 500,000 KRW to 1,000,000 to 5,000,000 KRW. The loan requirements for small business owners who have joined the SME Mutual Aid Fund were eased. Previously, loans could only be obtained after paying contributions for more than three months, but now loans can be received after paying for more than one month. The Yellow Umbrella Mutual Aid, which was effectively only payable at the stage of business closure, has expanded the reasons for payment to include temporary business crises such as disasters or illnesses.

The qualification criteria for full-time directors of SME cooperatives, which were stringent such as requiring a background as a public official, have been relaxed to allow experts from various fields to serve as full-time directors of SME cooperatives. The criteria for designating dormant cooperatives have been expanded to include cases where the chairman position has been vacant for more than one year and where the entire equity capital has been eroded for more than one year. This aims to induce early exit of poorly managed SME cooperatives and enhance the soundness of SME cooperatives.

Oh Young-joo, Minister of SMEs and Startups, said, “With this revision, the easing of loan requirements for the Mutual Aid Fund and the expansion of payment reasons for the Yellow Umbrella Mutual Aid are expected to help small and medium enterprises and small business owners who are struggling with funding needs for business stability,” adding, “We will continue to actively collect opinions from the field and identify and improve unreasonable systems in the operation of SME cooperatives.”

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