'Proactive Voluntary Restructuring Program' Supporting SMEs in Crisis

Ministry of SMEs and Startups and Korea SMEs and Startups Agency to Publish Best Practices Collection on the 20th
"Will Expand with Customized Programs"

The "Proactive Voluntary Restructuring Program," a joint effort between the public and private sectors to assist crisis-hit small and medium-sized enterprises (SMEs), has been shown to lead to the normalization of financial structures.

Photo provided by the Ministry of SMEs and Startups

The Ministry of SMEs and Startups and the Small and Medium Business Corporation announced on the 20th that they have published the "Proactive Voluntary Restructuring Program Best Practices Collection," which contains such information.

Since 2021, the Ministry of SMEs and Startups has been operating the Proactive Voluntary Restructuring Program in cooperation with banks and others to identify companies experiencing temporary management crises but with growth potential, supporting them in establishing management improvement plans and providing restructuring funds.

The support includes new loans (up to 6 billion KRW for facilities, 1 billion KRW for working capital, fixed interest rate of 2.5%), extension of maturity for existing loans, adjustment of interest rates on existing loans, and assistance in establishing business normalization plans. Last year, a total of 170 companies received 223.1 billion KRW in new funds, showing a 63% increase in the number of supported companies and a 268% increase in the scale of new loan support compared to the previous year. In particular, alongside policy fund support, negotiations with creditor banks were conducted to achieve interest rate reductions for SMEs with weak bargaining power.

Medios, a manufacturer of color contact lenses, faced liquidity crises due to decreased sales from COVID-19 and price reductions by overseas competitors, but through the Proactive Voluntary Restructuring Program, it received 620 million KRW in facility funds, achieved equipment automation and management advancement, resulting in increased sales and a return to profitability.

Other exemplary cases include JM Tech, a secondary battery production and automation equipment company; Seohung Engineering, a manufacturer of grating and structural metal products; Linkflow, a wearable 360-degree camera manufacturer; and Destin Power, a power conversion specialist. The casebook is available for viewing on the Ministry of SMEs and Startups website and the Small and Medium Business Corporation website.

Kim Woo-jung, Regional Enterprise Policy Officer, stated, "The Proactive Voluntary Restructuring Program can be a savior for promising SMEs with high growth potential but temporary difficulties," adding, "We will expand it as a customized program including joint financial support consultations with creditor groups for SMEs with weak bargaining power."

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