The Ministry of SMEs and Startups will drastically cut the amount of paperwork required for applications to support programs for small and midsize companies to block the involvement of so-called "illegal brokers." The plan aims to ease the burden on small and midsize companies and reduce the room for illegal brokers to intervene. Artificial intelligence (AI) will be introduced for drafting business plans, where illegal broker involvement has been frequent.
An illegal broker refers to a party that commits unfair acts, such as demanding excessive success fees or impersonating institutions, while claiming to help recipients obtain government policy funds or research and development (R&D) grants.
The Ministry of SMEs and Startups (MSS) held the third meeting of the "task force (TF) on resolving third-party undue intervention" on Feb. 6. The session explored a government-level response to third-party undue intervention such as illegal brokers. Policy finance institutions, including the Korea SMEs and Startups Agency (KOSME) and the Korea Technology Finance Corporation (KOTEC), as well as the Financial Services Commission, the Korean National Police Agency, and the Financial Supervisory Service, also participated to share information and establish a cooperative system for investigations and probes.
The Ministry of SMEs and Startups (MSS) will reduce application documents to ease difficulties for small and midsize companies preparing to apply for support programs. It will cut the average of nine application documents to 4.4 and abolish documents submitted out of habit. Documents not needed during the review process, such as startup maintenance consent forms and letters of commitment, will be submitted after selection, with the system adjusted accordingly.
For example, the seven documents required when applying for policy funds from the Korea SMEs and Startups Agency (KOSME)—such as the business registration certificate, tax payment certificate, and standard financial statements—are now automatically submitted through administrative information linkage. Procedural documents like consents for the provision and use of personal information can now be processed online.
The Ministry of SMEs and Startups (MSS) estimates that, under this system, 5.24 million documents submitted by 1.14 million applying corporations per year will be reduced. Assuming three minutes per document, it expects to save about 430,000 hours. Sixty percent of the target programs have already completed the document reduction and notices, and the remaining 40% will be coordinated with the Ministry of the Interior and Safety after March.
AI will be introduced for drafting business plans—where illegal brokers mainly intervened—to reduce administrative burdens on small and midsize companies. When corporations input business plan keywords, AI will produce a customized draft based on learned corporate data and program information.
The key going forward is how to define an illegal broker. Because the line between brokers and consultants is blurry, the government plans to clarify it through legislation. Typically, consultants provide advice needed for government program applications and corporate operations and receive agreed fees, while brokers seek private gain by, for example, extracting as much government support as possible and taking a cut.
The Ministry of SMEs and Startups (MSS) has categorized types of undue conduct as follows: ▲ entering false information in application documents ▲ promising fraudulent loans despite failing to meet eligibility requirements ▲ improper solicitations ▲ impersonating government partner institutions.
Park Yong-sun, director general for SME policy at the Ministry of SMEs and Startups (MSS), said, "We aim to define illegal acts and establish provisions to impose penalties based on law." Park added, "Among small business owners, some want legitimate consulting by paying a certain fee," noting, "We are also reviewing a 'consulting registration system.'"
Park emphasized, "We will not only respond directly to illegal brokers but also carry out efforts to improve convenience for small and midsize companies."