The Seoul Metropolitan Government announced that it will supply a total of 2.1 trillion won in policy funds (1.9 trillion won) and special guarantees (200 billion won) this year to help small and medium-sized businesses and small merchants overcome the management crisis caused by political turmoil on top of the slowdown in consumption and domestic demand.
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▲[Korean Today] 2025 sector-specific loan support plan © Reporter Byun A-rong |
The ‘Small Business Support Project’ announced last November will also be fully launched, including the establishment of an ‘Emergency Economic Recovery Fund’ of 200 billion won to provide early support in the first half of the year to small business owners on the brink of collapse, and the establishment of a special guarantee to support ‘Safe Savings Accounts’, which are overdraft accounts for small and low-credit small business owners.
The funds being supplied this time are composed of KRW 200 billion in ‘direct loans’ (fixed interest rate), KRW 1.7 trillion in ‘commercial bank cooperation funds’ (floating interest rate, interest difference compensation), and KRW 200 billion in ‘safe savings accounts’ (special guarantee) in the form of overdraft accounts for small business owners. By sector, KRW 860 billion for vulnerable small business owners such as those with low and medium credit scores and the socially disadvantaged, KRW 340 billion for promoting prepared startups and growth of excellent companies, and KRW 900 billion for general small business owners.
This year, the scale of loan support has been increased by 35 billion won compared to 2024 to ensure smooth financing for small and medium-sized enterprises and small business owners who are facing a livelihood cliff due to rising management costs and prolonged economic recession, and applications for funds will be accepted starting Thursday, January 2. The ‘Safe Savings Account’, which allows for non-face-to-face applications for up to 10 million won per person, is scheduled to be officially launched at the end of February after the system is established.
In particular, this year, a 200 billion won ‘Emergency Economic Recovery Fund’ has been newly established for small business owners who have been hit hard by the prolonged domestic recession and consumption decline. The target of support is companies and small business owners whose sales have decreased by 10% or more compared to the previous quarter, half year, or the same period last year, and the interest difference of 2.0% will be compensated up to a limit of 50 million won.
In addition to management difficulties, the ‘principal repayment deferral system’ will also be launched for small business owners who are suffering from double hardship due to debt repayment. The support target is companies that received installment repayment loans from Seoul City’s SME Promotion Fund before 5/31/24 and repay in installments during the application period (1/2/25~6/30/2025). The principal repayment can be deferred for up to 6 months from the application date. The application period is from Thursday, January 2 to Monday, June 30, and interest payment deferral and loan maturity extension are not included.
The ‘Small Business Support Project’ announced last November will also be fully launched. The ‘Swift Dream Fund’ support for existing low- and mid-credit borrowers (credit score of 839 points or lower) will be expanded to include low-income and socially disadvantaged people, and the ‘Emergency Self-Employed Fund’ support scale will be increased by 20 billion won compared to last year. The ‘Hope Companion Fund’, a loan product, will also be continuously operated to expand the scope of support for vulnerable groups.
The ‘Startup Fund’ for prepared entrepreneurs has increased the support scale by 65 billion won from the previous year to 100 billion won, and ‘Youth Meal Kit Startup Support Project’ has been added to the special support target. The plan is to strengthen support for early-stage entrepreneurs who had difficulty receiving loans due to not meeting conditions such as sales volume, and help them make a solid and stable start.
In addition, the size of the ‘Job Creation Excellent Enterprise Fund’ will be increased by KRW 165 billion from the previous year to a total of KRW 225 billion to actively support the scale-up of promising companies with high growth potential. Reflecting the importance of sustainable management, the size of the ‘ESG Fund’ (formerly the Eco-friendly Enterprise Fund) will be increased by KRW 5 billion, and the support target, which was previously limited to the environmental industry (E), will be expanded to include social responsibility (S) and governance (G).
In addition, the ‘Growth Base Fund’ and ‘Economic Activation Fund’, which can be applied for by any small and medium-sized enterprise or small business owner located in Seoul without any separate qualification requirements, will be supplied at a scale increased by 440 billion won compared to the previous year, so that more citizens can receive support.
Meanwhile, Seoul City will reduce the interest rate on direct loans such as facility and management stabilization funds by 0.5%p year-on-year to help ease the financial burden on small business owners due to decreased sales and repayment difficulties caused by sluggish domestic demand, and maintain the low-interest policy fund policy. The secondary collateral interest rate will also be frozen. Based on the CD interest rate of 3.39% (December 24), the actual burden interest rate for secondary collateral is expected to be 2.59-3.79%, with 1.8-2.5%.
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▲[Korean Today] 2025 Direct Loan Fund Interest Rate Change Table © Reporter Byun A-rong |
The application for the SME support fund mentioned above can be made through the Seoul Credit Guarantee Foundation website (seoulshinbo.co.kr), mobile app, Shinhan Bank’s ‘Shinhan Solbiz’ (1599-8000), Hana Bank’s ‘Hana One Q Enterprise’ (1599-1111), Kookmin Bank’s ‘KB Star Enterprise Banking’ (1588-9999), and Woori Bank’s ‘Woori WON Banking Enterprise’ (1588-5000) mobile app. If non-face-to-face application is difficult, you can make a reservation by calling the Seoul Credit Guarantee Foundation Customer Center (1577-6119) or through the website, and then visit the branch on the date.
Song Ho-jae, director of the Seoul Metropolitan Government’s Bureau of Public Livelihood and Labor, said, “This year’s policy fund support is focused on clearly setting the direction for vulnerable groups and promising small business owners, and increasing practical effects through restructuring the funding structure and lowering interest rates.” He added, “We will do our best to quickly provide funds in the first half of the year to overcome the financial burden on small business owners and revitalize the people’s economy.”
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