Low-interest relief on the way for sellers hit by Qoo10 cash crisis

Economy

Low-interest relief on the way for sellers hit by Qoo10 cash crisis

Published: 06 Aug. 2024, 19:00 Updated: 06 Aug. 2024, 19:26

KIM JU-YEON
kim.juyeon2@joongang.co.kr

Economy Minister Choi Sang-mok, center, speaks at a policy meeting held between People Power Party members and government officials at the National Assembly building in Yeouido, western Seoul on Tuesday. [YONHAP]

The government will roll out financial aid measures for merchants affected by TMON and WeMakePrice from Wednesday to offer relief for damages resulting from the cash-strapped platforms’ delayed payouts to sellers, last estimated at 278.3 billion won ($203 million).

The support plan, which includes loan extensions and low-interest loans, will be paid for with the government’s previously announced emergency funding of 560 billion won to help small- and mid-sized enterprises affected by the delays stay afloat, the Financial Services Commission and Ministry of SMEs and Startups said in a joint statement Tuesday.

As part of the plan, companies that have not received their due payments or expect payments to be delayed can apply to extend or defer loan payments for up to one year from Wednesday. All businesses that have evidence of earned revenue from goods sold on TMON and WeMakePrice can apply, as well as banks that gave out presettlement loans to sellers based on the two platforms’ accounts receivable.

The Industrial Bank of Korea and the Credit Guarantee Fund will also offer low-interest loans to businesses from Friday, with a minimum of 300 billion won at their disposal. They are set to be processed starting from Aug. 14.

Each affected seller will be able to borrow up to the amount of their delayed payout, capped at 3 billion won. Those who have claims of over 3 billion won can use credit guarantee or primary collateralized bond obligation services, which allow companies to directly raise funds through corporate bonds.

The interest rate will be set between 3.9 percent and 4.5 percent, with a separate guarantee fee. The rate is at least 1 percent lower than the average loans offered to small- to mid-sized businesses on the market, according to the financial authorities.

Merchants affected by delayed payments from TMON and WeMakePrice hold up signs with text demanding relief measures at the inauguration ceremony of the emergency committee created for the sellers' damage relief on Tuesday. [NEWS1]

The Small Enterprise and Market Service and the SMEs and Startups Agency will also lend 200 billion won as emergency management funds with even lower interest rates to eligible merchants.

This also allows sellers to borrow up to the amount of their unpaid earnings. Small-sized firms have a cap of 150 million won and an interest rate of 3.51 percent, while mid-sized firms are limited to 1 billion won at 3.40 percent.

An emergency response team made up of state-run institutions and all industry associations has also been created to closely monitor the distribution of funds and prevent the processing of duplicate applications for support. A total of 30 counseling centers under the supervision of the Financial Supervisory Service will field questions and carry out counseling for the applications.

Earlier on Tuesday, Economy Minister Choi Sang-mok said the government will also look into additional measures such as advance payments and loans for living expenses in the case of overdue wages for employees at firms affected by the payouts.

Minister of Economy and Finance Choi Sang-mok, right, and People Power Party leader Han Dong-hoon speak at a policy meeting held between the ruling People Power Party members and government officials at the National Assembly building in Yeouido, western Seoul on Tuesday. [NEWS1]

Choi cited the Financial Supervisory Service's estimate that delayed payouts amount to 278.3 billion won as of last Thursday, up from the 274.5 billion won calculated as of July 31. The number will likely grow once earnings from June and July are factored in.

Support will also be provided so that all customer refunds for products bought on TMON and WeMakePrice — excluding gift cards and vacation packages — will be processed through credit card companies or payment gateways within this week, the minister said at a policy meeting held between the ruling People Power Party members and government officials.

The government plans to shorten the payment period for e-commerce platforms and payment gateways from the current 40 to 60 days, which is on par with large retailers, as well as order the separate management of earnings as a preventive measure. Supervision of payment gateways will also be strengthened.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]