On January 1st, the Seoul Metropolitan Government announced that it would provide policy funds and special guarantees totaling 2.1 trillion won to support small and medium-sized enterprises (SMEs) and small business owners facing management crises due to consumer contraction and domestic demand sluggishness caused by martial law situations and the Jeju Air disaster. SMEs and small business owners located in Seoul can apply for these funds if they meet certain loan conditions.
The funds provided by the Seoul Metropolitan Government include a ‘direct loan fund’ of 200 billion won, ‘cooperative funds with commercial banks’ of 1.7 trillion won where the city covers part of the bank loan interest, and a 200 billion won ‘safety account’ (a type of overdraft account) for small business owners. The city’s direct loans will be offered at a fixed interest rate of 2.0% to 3.3%, which is 0.5 percentage points lower than last year’s rate. The commercial bank loans have variable interest, with the city covering 1.8% to 2.5% of the interest.
Among the bank loans, 200 billion won is designated as ‘emergency economic recovery funds’ for small businesses whose sales have significantly declined. Businesses and small business owners with a sales decrease of more than 10% compared to the previous quarter, half-year, or the same period last year can apply. The maximum loan limit is 50 million won, and the city covers a 2.0% interest difference.
The loan size for ‘start-up company funds’ has increased by 65 billion won from last year, to a total of 100 billion won. Special support targets include initiatives such as the ‘Youth Meal Kit Start-up Support Project.’ The city covers a 1.8% interest difference, and loans can be requested up to a maximum of 100 million won.
The ‘safety account’ for small business owners, functioning like an overdraft account, also offers up to 2 billion won. For medium- to low-credit, low-income, socially disadvantaged, and disaster-affected businesses, an individual can open a safety account for up to 10 million won online.
Applications for funds will start on January 2nd and can be made through the Seoul Credit Guarantee Foundation’s website or mobile app. They are also accessible via mobile apps of private banks such as Shinhan Bank’s ‘Shinhan Sol Biz,’ Hana Bank’s ‘Hana 1Q Business,’ KB Kookmin Bank’s ‘KB Star Banking for Business,’ and Woori Bank’s ‘Woori WON Banking for Business.’ However, the safety account will be implemented at the end of February following system development. Song Ho-jae, head of the Seoul Metropolitan Government’s Civil Affairs and Labor Bureau, stated, “We will do our best to promptly promote the supply of funds in the first half of the year to overcome the financial burdens on small businesses and stimulate the people’s economy.”