The Small and Medium Business Administration (SMBA) has decided to offer 100 billion won in guarantees to startups suffering financial difficulties. The implementation of the guarantees is effective from Oct. 1.
The reality is that owners of startups typically struggle through a period called “Death Valley” for three to seven years after launch, in which they are faced with such woes as financial difficulties in securing additional funds and market entry barriers.
In an effort to extend a helping hand to startups suffering such difficulties, SMBA plans to extend loans of a maximum of 200 million won with a lower interest rate of 2.9 percent in operating funds for a five-year period. The loan cap for non-manufacturing businesses will be up to 100 million won. The administration plans to extend a maximum of 200 million won in facility funds for expanding factories or installing equipment for up to eight years.
Incorporated startups that meet given guidelines will be exempted a collective collateral stipulation. Beneficiaries will be selected among startups, recommended as companies with growth potential by such institutions as the Small and Medium Business Corporation, that have been with the manufacturing and knowledge service industries for less than seven years since launching the businesses.
Companies that own patents given a “B” grade or higher by the Korea Invention Promotion Association can submit an application to become loan recipients.
Prospective loan recipients are required to submit an application to a branch of the Korea Federation of Credit Guarantee Foundation. They can take out loans from four commercial banks, including NH Bank, the Industrial Bank of Korea, Woori Bank and Shinhan Bank.
“The loan guarantees being extended to companies with manufacturing and knowledge service industries, which have higher effects of creating jobs and added values, will play a pivotal role in turning around the sagging economy and creating jobs,” SMBA officials said.
SMBA Introduces ‘Rechallenging Program’ to Provide Support
The SMBA and the Korea Institute for Start-up & Entrepreneurship Development (KISED) have introduced a program to offer a full package of support to failed businesspeople, ranging from education to commercialization.
The so-called Rechallenging and Success Package Program offers support tailored to meet each successful applicant’s individual characteristics and experiences, departing from the conventional method of simply providing financial support. The program is also designed to analyze reasons for each applicant’s failures.
The program calls for each “rechallenging” businessman to initially undergo a practical education on relaunching start-ups for 70 hours to 90 hours, then 30 hours of mentoring, followed by support for commercialization and post-startup support. Applicants will be given a chance to conduct a final check on the type of relaunching business via a startup promotion event after completing the practical education. Sixty of the commercialization applicants will be finalized through a mentoring evaluation. Each finalist applying for core business areas will be offered up to 70 million won in financial support for startup costs, while each prospective businessperson applying in the general business areas will be provided up to 35 million won. “Rechallenging” prospective businessmen will continue to be provided with follow-up support, such as the provision of funds, attracting venture investments and startup support policies.
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The SMBA hosted the 2015 Korea Rechallenging Hope Forum. (Photos:SMBA)
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