About 98% of South Korean businesses are small and medium sized corporations. They serve as engines of economic growth, innovation and employment generations. Although the role of SMEs in boosting the economy is getting more prominent, many constraints such as insufficient cash flows or debt problems deter them from being successful and impede their expansion.
According to the Bank of Korea, 95% of their business funding comes from bank loans, which indicates that they usually end up being deep in debt. With thousands of start-up businesses failed on a monthly basis, the Financial Services Commission established the Start-up Businesses Assistance Commission this April to help them get out of financial troubles and encourage those who fail in businesses to keep pursuing their entrepreneurial spirits. The main roles of the commission are to provide debt relief and business grants to start-up enterprises whose debts are less than 30 billion won.
The Credit Counseling and Recovery Services Commission will provide a maximum of 30 billion won and an amortizing debt reduction of up to 50% to business owners whose debts are less than 30 billion won. Furthermore, depending on the debtor’s ability to pay off, amount of debt, technological prowess and business potentials, companies can get up to a five year grace-period( interests will be exempt during this period) and extend a loan term up to 10 years. Eligible business owners can directly apply to this program and get more information on the website (www.ccrs.or.kr) or via phone (1600-5500)
Overall, the debt rescheduling program provided by the Start-up Businesses Assistance Commission may be good news to entrepreneurs who are having debt problems or unwelcomed by commercial banks as they are reluctant to lend business money. Moreover, it is also expected to help business owners who have already experienced failures to restart their businesses based on their experiences and business skills. In addition to the establishment of this commission, the Financial Services Commission will offer more business grants, debt reduction and micro- credit to low income individuals and SMEs.
Juyeon Kook( firstname.lastname@example.org)