'"We Still Can't Get Loans"... Government Changes Funding Support Scheme for Homeplus Store Owners'

Agency Loans to Be Converted to Direct Loans
Applications to Begin on March 3
Total Limit Stays at 70 Million Won...Critics Say Impact Will Be Limited

The government has decided to lower loan barriers and simplify procedures for tenant store owners whose sales have plummeted due to Homeplus store closures. This is a supplementary measure following continued criticism from the field that the review procedures for existing government policy funds are too stringent, resulting in limited tangible benefits.

In front of a Homeplus store in downtown Seoul. Yonhap News

According to the government and related industries on the 19th, the Ministry of SMEs and Startups plans to convert the Emergency Management Stabilization Fund, which has been provided to Homeplus tenant store owners, from an agency loan scheme to a direct loan scheme. Accordingly, the ministry will include Homeplus tenant store owners among the eligible borrowers of the Emergency Management Stabilization Fund for temporary business difficulties, and will start accepting applications through its affiliated agency, the Korea SMEs and Startups Agency, from March 3.

The Ministry of SMEs and Startups is also reviewing a plan to replace the on-site due diligence process, which is conducted for direct loans, with a simplified review. The intention is to ensure swift funding support, given that the business conditions of tenant store owners affected by Homeplus closures are worsening by the day.

Under the direct loan scheme, loans are executed through direct review by the Korea SMEs and Startups Agency, the fund execution body, without screening by guarantee institutions and banks. It is available to small business owners with annual sales of less than 104 million won and less than seven years in business. Compared with the agency loan scheme, under which loans are executed after reviews by guarantee institutions and banks, the direct loan scheme offers a higher likelihood of approval under the same financial conditions and a simpler process, making it relatively preferred by small business owners.

At the second meeting held last month between the Ministry of SMEs and Startups and Homeplus tenant store owners, the store owners complained that the government’s criteria for executing the Emergency Management Stabilization Fund were so strict that the impact on the ground was limited. After the first meeting held last year, the ministry prepared measures such as expanding the support to all stores and removing relocation and restart requirements. However, in reality, many in the field reported that they were unable to obtain loans due to insufficient credit ratings and loan limits.

This measure is expected to ease the difficulties of some store owners whose loan applications had been rejected due to low credit ratings. However, some voices argue that its effectiveness will remain limited because difficulties stemming from insufficient loan limits persist. The Emergency Management Stabilization Fund is provided up to a maximum limit of 70 million won, and a considerable number of tenant store owners were already in a situation where additional borrowing was virtually impossible due to existing loans.

A representative of the Homeplus Tenant Store Owners’ Association said, "From the store owners’ perspective, the greatest difficulty is the high hurdle posed by the loan limit," adding, "If the limit is not increased, the measure will not be of much help." A Ministry of SMEs and Startups official explained, "Any adjustment of the limit requires consultation with guarantee institutions, and we are discussing this with the relevant organizations."

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