Small business owners struggling in the economic downturn, what they need most is an ‘economic boom’

Small business owners demand ‘financial support policy’ as sales continue to decline due to recession
“We will actively support small business owners” Ministry of SMEs and Startups announces policy funding of 3 trillion won this year
There are also voices calling for measures to alleviate the recession

Small business owners who are facing difficulties due to decreased sales due to the recession chose ‘expansion of financial support policies’ as the policy they most look forward to this year. There were also loud voices asking for practical help, such as commercial district development, to enable the business to continue. The government has introduced various measures for them, such as expanding policy funds for small business owners and supporting employment insurance premiums, but some argue that it is urgent to resolve the recession, which is the root cause of the problem.

Policies desired by small business owners this year: financial support, revitalization of commercial districts

On the 10th, Korea Credit Data, which operates Cashnote, a business management service introduced to 130 million businesses nationwide, announced the results of a survey of small business owners titled ‘Economic Policy Expectations for 2024’. As a result of the survey, 36% of respondents chose ‘financial support policy’ as the policy that small business owners are most looking forward to. This was followed by ▲ commercial district revitalization policy at 24%, ▲ business closure and re-startup support policy at 16%, and ▲ management support (tax, labor, legal) program support policy at 11%. Mr. A, a small business owner who chose the financial support policy, said, “We need a realistic and immediately supportive policy,” and added, “As the economic recession is expected to be prolonged, I look forward to growth financial support policies and win-win financial support policies that can overcome the crisis.” reported.

When dividing the survey results by the nature of the policy, there were nearly twice as many small business owners expecting non-financial support than financial support. Specifically, 2% of small business owners expect financial support such as low-interest loans and growth promotion funds, and 36% of small business owners expect non-financial support such as support for commercial development, revival of traditional markets, and re-launch support. Mr. B, a small business owner who emphasized the revitalization of commercial districts, said, “Giving money does not help much in commercial districts where the floating population is decreasing,” and added, “I hope the government will step in and carry out a movement to restore commercial districts so that more people can visit and revitalize the region.” I answered.

There were also voices from small business owners who had reached their limit. These are people who cannot withstand the recession and are contemplating closing down their businesses. They requested practical alternatives to overcome difficulties such as store demolition costs, business closure subsidies, and re-start support.

Small business policies have been strengthened, but measures to alleviate the economic downturn are also needed

Meanwhile, the Ministry of SMEs and Startups announced a policy targeting small business owners on the 4th. In particular, this year, the supply scale was expanded to 23.7 trillion won, a 3% increase from last year, for small and medium-sized business owners suffering from high inflation and high interest rates. By fund, ▲7,000 trillion won will be provided to support alleviation of business difficulties for general small business owners, ▲1 trillion won will be provided for management stability of small business owners who are vulnerable due to low credit or disaster victims, and ▲1,100 billion won will be provided to promote innovative growth of promising small business owners. The plan is to strengthen the financial safety net by diversifying support funds for each small business, such as refinancing loans and funds for temporary management difficulties, while nurturing entrepreneurial-type small business owners based on their growth potential.

In addition, on the 10th, the Ministry of SMEs and Startups announced that it would significantly expand the ‘Employment Insurance Premium Support Project for Self-Employed Workers’ compared to the previous year to encourage small business owners to sign up for employment insurance. The gist of this project is to relieve the burden of signing up for employment insurance by subsidizing a portion of the insurance premiums for small business owners (business owners) who have signed up for employment insurance for up to five years. If you maintain employment insurance coverage for at least one year, you can receive various social safety net benefits, such as job search benefits and job skill development support, even if you apply for involuntary business closure, which is of practical help. Kim Bong-deok, head of the Small Business COVID-5 Recovery Support Group, who announced this news, said, “Employment insurance can be a strong support in the event of a business crisis for small business owners who lack a social safety net after business closure,” and added, “This year, the employment insurance premium support rate will be expanded to up to 1%.” “We will make more efforts to expand the social safety net for small business owners,” he said.

However, industry experts point out that while it is important to prepare temporary measures for small business owners, overcoming the recession, which is the cause of the difficulties, is more urgent. According to the results of ‘Small Business Management Status and Policy Tasks’ conducted on 1,000 small business owners by the Korea Federation of Small and Medium Businesses at the end of last year, 92.5% of small business owners predicted that the business environment next year would be similar to this year (42.4%) or worse (50.1%). . In relation to this, an official from the Small Business Federation said, “Small business owners account for 95.1% of businesses nationwide. “If small business owners, the cornerstone of the local economy, collapse, there will be repercussions in the economy,” he said. “The government needs an effective alternative to resolve the recession.”