The government will build an artificial intelligence (AI)-based alert system that detects early signs of crisis among small and midsize corporations and moves to respond. It will also revamp the support framework for corporations switching business lines to help promising corporations make a comeback.
The Ministry of SMEs and Startups on the 8th, at a joint meeting of the Emergency Economic Headquarters and the ministers' meeting on strengthening economic and industrial competitiveness, announced with related ministries the "measures to support SME comebacks."
According to Korea Enterprise Data (KODATA), the share of marginal small and midsize corporations steadily rose from 6.5% in 2020 to 7.9% in 2022 and 8.8% in 2024.
An analysis by the Ministry of SMEs and Startups (MSS) of 110,000 incorporated small and midsize corporations with available 2024 financial information found that about half were experiencing crises or signs of crisis, such as slowing growth or financial deterioration. Among corporations facing financial crises, 45.0% of marginal corporations are increasing sales, suggesting they could return to normal if restructuring occurs in a timely manner.
Before crises persist, the government will set up a system to capture warning signals and select corporations with strong recovery potential for tailored support. To that end, the Korea SMEs and Startups Agency (KOSME) will expand its early warning management for signs of insolvency—currently run for 60,000 loan corporations—to 250,000 small and midsize corporations, and will build an "AI-based SME crisis alert notification system."
The system uses AI to analyze not only financial and credit data but also unstructured data such as news and industry trends, enabling early detection of crisis signals for individual corporations as well as by region and industry.
Crisis levels by corporation are divided into four stages: normal, caution, pre-alert, and alert. Corporations at the pre-alert and alert stages will receive crisis notifications and information on comeback support programs via text message and social networking services (SNS).
Support for restructuring will refocus screening criteria on normalization and growth potential, and for corporations that faithfully carry out management improvement plans, the government will streamline funding evaluation procedures and offer preferential loan benefits.
The scope of support for business transitions will also be expanded. In addition to the existing six new business sectors—such as producing new products through industrial convergence and ICT convergence—the plan adds the five-axis, three-special growth engines and regional flagship industries to steer transitions into promising fields.
The performance management method will shift from the existing success/failure-focused evaluation to a "milestone (stage goals)" framework that reflects annual target attainment and outcomes.
Corporations receiving high marks will be selected as "leading corporations in business transition" and linked with the Jump-up Program, a growth program for promising SMEs, to accelerate growth. In addition to changes in business category, various forms of business transition such as spin-offs and mergers and acquisitions (M&A) will also be eligible for support.
In addition, reflecting the characteristics of corporations transitioning businesses, the government will pursue institutional improvements so that even if existing business sites are downsized, corporations can receive local investment subsidies when their new investment is larger. For corporations approved to switch to new businesses, the stay period for specialized foreign workers (E-7) will be extended from the current three years to up to five years to help secure talent.
No Yong-seok, first vice minister of the Ministry of SMEs and Startups (MSS), said, "We will focus policy capacity and resources so that small and midsize corporations with growth potential overcome crises through restructuring and shifting to new businesses and secure new growth engines," adding, "We will build an SME comeback ecosystem where innovation and challenge continue."