South Korean small business financial support

South Korea is implementing measures to support small business owners and self-employed individuals facing financial instability due to high interest rates and sluggish domestic consumption.

The Ministry of SMEs and Startups launched a nationwide consultation initiative across 14 regions to provide customized guidance on debt adjustment, policy funding, and business reorganization. Concurrently, the government announced a debt restructuring plan targeting unsecured loans from the COVID-19 pandemic, offering interest rate reductions and expanded loan products like ‘Hope Dream Loans’ and ‘Sunshine Loans’.

To strengthen the social safety net, the government and the insurance industry have expanded insurance-based support. A 30-billion-won mutual growth fund is being utilized to provide free insurance to approximately one million small business owners across seven regions. This includes credit life insurance for loan repayments in cases of death or major illness, alongside non-life insurance covering fire, business interruption, and cybercrime.

Newer initiatives focus on specific demographics and risks. The Ministry of SMEs and Startups has proposed a ‘Startup Relief Policy Insurance’ for young entrepreneurs with less than five years of operation, which may subsidize 60% to 80% of premiums and provide up to 20 million won for re-startup costs following business closures due to disaster or illness. Other proposed measures include childcare allowances for solo entrepreneurs and expanded employment insurance.

In the environmental sector, a collaboration involving the Ministry of Environment, DB Insurance, and the Korea Federation of SMEs continues to support small and medium-sized enterprises by subsidizing up to 50% of environmental liability insurance premiums to mitigate mandatory coverage costs.