The Seoul Metropolitan Government announced on the 6th that it has allocated 2 billion won in the supplementary budget for the second half of the year to expand support for accounts receivable insurance premiums and export insurance and guarantee fees aimed at small and medium-sized enterprises. This is intended to reduce the risks of chain bankruptcies in small and medium-sized enterprises and export damage due to the bankruptcy of trading partners and uncollectible payments.
The budget allocates an additional 1 billion won each for accounts receivable insurance premiums to prevent corporate chain bankruptcies and for export insurance and guarantee fees to respond to export risks. According to the Seoul Metropolitan Government, 90% of the budget for accounts receivable insurance premiums and export insurance and guarantee fee support allocated in the first half of this year has been exhausted, influenced by an increase in the number of small and medium-sized enterprises applying for related budgets due to the recent economic downturn.
In response, the Seoul Metropolitan Government will support up to 5 million won per corporation for accounts receivable insurance premiums to prepare for cases where goods or services are sold on credit to trading partners and payment cannot be collected. Small and medium-sized enterprises that have subscribed to this insurance can receive compensation for up to 80% of the accounts receivable incurred during the one-year insurance period in case of reasons such as the trading partner's current bankruptcy, business closure, or initiation of rehabilitation or bankruptcy proceedings.
The Seoul Metropolitan Government noted, "Accounts receivable insurance can serve as a social safety net to prevent the chain bankruptcy that spreads from the bankruptcy of trading partners to partner corporations."
Support for accounts receivable insurance premiums can be applied for year-round. Applications can be made by visiting the Korea Credit Guarantee Fund (KODIT) branch or the Credit Insurance Center. If necessary, telephone consultations are also available.
In addition, a maximum of 3 million won will be provided per corporation for export insurance and guarantee fees. The Seoul Metropolitan Government stated that this could reduce the risk of uncollectible foreign exchange receivables for exporting corporations and relieve the burden of trade financing.
Eligible applicants are small and medium-sized enterprises in Seoul with export amounts of less than $50 million in the previous year. Applications can be submitted for 13 types of support, including export insurance, export credit guarantee, and exchange rate fluctuation insurance. The amount of support will be determined based on a comprehensive assessment of corporate creditworthiness.
Support for export insurance and guarantee fees can also be applied for year-round. Applications can be submitted after contacting the Korea Trade Insurance Corporation (K-sure) by phone and sending the application form via the cyber branch or fax. However, group insurance applications must be submitted by email.
Lee Jun-hyung, the head of the Economic and Employment Planning Division of the Seoul Metropolitan Government, said, "The support for insurance premiums is not simply an expense subsidy but a key means to enhance transaction stability and the possibility of recovering funds," adding that he hopes it will support the sustainable growth of small and medium-sized enterprises.