SMEs Face 26.3 Million Won Lunar New Year Funding Shortfall... Four in Ten Will Not Pay Bonuses

29.8% Report "Worse" Financial Conditions
Sluggish Sales Cited as Main Cause of Difficulties (82.8%)

The survey found that the average funding shortfall that small and medium-sized enterprises (SMEs) face relative to the funds they need for this year's Lunar New Year is 26.3 million won. Four out of ten SMEs are unable to pay Lunar New Year bonuses.

"Financial conditions of small and medium enterprises compared with last year's Lunar New Year" — results from the 2026 Lunar New Year fund demand survey. Korea Federation of Small and Medium Enterprises

On February 10, the Korea Federation of SMEs announced that, in its "2026 SME Lunar New Year funding demand survey" of 819 SMEs, more companies responded that their financial conditions are "difficult" (29.8%) compared with last year's Lunar New Year than those that said conditions are "smooth" (19.9%). Another 50.3% answered "average."

As for the causes of financial difficulties (multiple responses allowed), "sluggish sales" was cited most frequently at 82.8%. This was followed by "rising prices of raw and subsidiary materials" (44.3%) and "higher labor costs" (32.4%).

SMEs responded that they need an average of 202.7 million won for this year's Lunar New Year funds. The average shortfall relative to the required funds was 26.3 million won.

Results of the 2026 SME Lunar New Year Funding Demand Survey: Findings on the "Causes of Financial Difficulties for SMEs". Korea Federation of SMEs

Regarding plans to secure insufficient Lunar New Year funds (multiple responses allowed), the most common responses were "early collection of accounts receivable for deliveries" (58.0%), "borrowing from financial institutions" (42.5%), and "postponing payments" (32.9%). A full 18.4% responded that they "have no countermeasures."

Among SMEs, 46.8% said they plan to pay Lunar New Year bonuses in cash this year, while 40.2% said they will "not pay." Another 13.0% said they have "not yet decided." Compared with last year's survey, the share of companies planning to pay bonuses decreased by 2.1 percentage points, while the share saying they will not pay increased by 9.3 percentage points.

For those paying bonuses as a percentage of salary, the average level was 50.0% of base pay. For those paying a flat amount, the average was 593,000 won per person. In the case of flat payments, the per-capita amount increased by 169,000 won compared with last year's survey.

Responses to "Plans to Secure Lunar New Year Funds" in the 2026 Small and Medium Enterprises Demand Survey on Lunar New Year Funds. Korea Federation of SMEs

Regarding whether they have plans for additional days off beyond the official Lunar New Year holidays this year, nine out of ten SMEs (91.6%) said they have no such plans. Among the SMEs that do plan additional days off (8.4%), the average number of extra days off was 1.8 days.

Compared with last year's Lunar New Year, conditions for raising funds through financial institutions were rated "average" by 67.5%, "good" by 17.8%, and "difficult" by 14.7%. When asked whether they face any difficulties in obtaining funds from banks, the share responding "no" (86.3%) was higher than those responding "yes" (13.7%).

Among those reporting difficulties in obtaining bank financing (multiple responses allowed), the most common issue was "high lending rates" (63.4%), followed by "insufficient credit limits" (38.4%), "stricter collateral requirements" (19.6%), and "reduced unsecured lending" (17.9%).

Kim Heejung, head of the Economic Policy Division, said, "SMEs are currently mobilizing all available means, such as early collection of accounts receivable for deliveries, to secure Lunar New Year funds, as they face a double burden of reduced cash inflows due to weak sales and higher costs caused by high interest rates." Kim added, "One out of every five SMEs still has no concrete funding measures in place, so preemptive attention and active support from policy institutions and the financial sector are needed to ensure that smooth funding for SMEs during the holiday season can lead to management stability after the holidays."

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