The Seoul city government said on the 1st that it will provide a total of 2.4 trillion won in small and midsize business development funds this year to support small and midsize businesses and small merchants whose management burdens have grown due to a weak won and high inflation.
The support funds consist of 180 billion won in direct loan funds operated with the Small and Midsize Business Development Fund; 2.02 trillion won in commercial bank cooperation funds, for which the city covers part of the interest on loans from commercial banks; and 200 billion won for the Safe Account (special guarantee), a revolving line of credit.
By target, 810 billion won will support vulnerable small merchants, 385 billion won will promote startups and the growth of outstanding companies, and 1.205 trillion won is allocated to support general small merchants.
Direct loan funds are divided into facility funds, growth base funds, emergency self-employed funds, innovation-type corporate leap funds, and disaster small and midsize business funds, with an annual rate of 2.0% to 3.0%.
Starting with new lending this year, the commercial bank cooperation funds will cut the small and midsize business and small merchant add-on rates at 16 commercial banks by 0.1 percentage point, and fully waive the previously imposed early repayment fee (0.03%–0.17% of the repayment amount). The annual 1.8% interest differential subsidy will remain unchanged, putting the actual lending rate at about 1.91% to 3.11%, the city said.
Of the cooperation funds, 300 billion won in "Hope Companion Funds" will be operated as refinancing and switching loans. Not only corporations using guarantees from the Seoul Credit Guarantee Foundation but also corporations with loans from private financial institutions can switch high-interest loans to low-interest loans.
In addition, 100 billion won of the cooperation funds is set aside as "support funds for vulnerable business operators." Vulnerable business operators designated by the Seoul Credit Guarantee Foundation can receive an annual 2.5% interest subsidy benefit of up to 50 million won per business.
A total of 30 billion won will be invested as comeback support funds for corporations participating in the "Seoul-style Restart 4.0 Project" and corporations in the early identification program for small merchants in crisis.
The "job-creating excellent corporations fund," aimed at corporations that contribute to employment stability, expands eligibility to small companies and small merchants enrolled in industrial accident insurance as small and midsize business owners, with a support scale of 250 billion won.
In addition, startup corporate funds total 120 billion won, up 20 billion won from the previous year; 10 billion won is allocated as ESG funds for corporations practicing ESG; and 20 billion won is set aside as Seoul Delivery Win-Win Funds to support small merchants using the public delivery app "Seoul Delivery + Ddangyo."
Applications for Small and Midsize Business Development Funds can be made non-face-to-face starting on the 2nd via the Seoul Credit Guarantee Foundation mobile app for sole proprietors (single representatives). Announcements related to support funds for vulnerable business operators and the Safe Account will be made separately, and the Safe Account is scheduled to be announced in March.
Lee Hae-seon, head of the Seoul City Office of People's Livelihood and Labor, said, "We will strengthen financial support so that small merchants and small and midsize businesses can continue operating stably even in a difficult business environment."