Gov’t will spend $1.8 billion to help small businesses

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Gov’t will spend $1.8 billion to help small businesses

The Small and Medium Business Administration announced Tuesday that it will expand the fund available for small entrepreneurs from the current 2 trillion won ($1.77 billion) to 4 trillion won by 2022, as the new administration plans to raise the minimum wage to 10,000 won by 2020.

The ministry will use the fund to offer loans at a lower interest rate compared to commercial financial institutions.

The business administration said it will keep the interest rate low at between 2.3 and 2.7 percent. The government also plans to expand the trust guarantee funds from 18 trillion won to 23 trillion won by 2022 to help small businesses come up with needed funds.

According to the Small and Medium Business Administration, it will focus first on helping retail, restaurant and hospitality related businesses, internet cafes, auto repair shops and traditional markets that are likely to be hit harder by the new minimum wage.

“Worries might rise due to the hike in the minimum wage even though the government plans to give financial support,” said an official from the administration. “We will communicate closely with industries to ease their concerns and reflect on entrepreneurs’ ideas to reduce the burden for them as much as possible.”

The government plans to expand the special vouchers that can be used at traditional markets by the end of this year to help small stores that are having a hard time. It will also come up with plans to ease the negative impact coming from the antigraft Kim Young-ran Act, which went into effect last year.

The administration also said that it will train 15,000 entrepreneurs for five years, or 3,000 entrepreneurs a year, in order to help them become more competitive.

On Sunday, the Ministry of Strategy and Finance announced its plan to help small businesses that are likely to be affected, saying it will spend some 3 trillion won to support companies with fewer than 30 employees so that they can afford the new wage. The Finance Ministry also said it will reduce credit card service fees for small businesses and give them more tax benefits.

Last week, the Minimum Wage Commission set next year’s minimum wage at 7,530 won per hour, up 16.4 percent from last year, causing backlash from business industries. The Korea Federation of SMEs argued that companies will have to pay 15.2 trillion won more next year due to the new minimum wage.

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