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  • Seoul’s Emergency Aid for Small Businesses Damaged by COVID-19 Pandemic

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    10-Day Commitment

    -Action Plan for Expansion of Credit Supply and Streamlined Procedures-

    (Date & Time: March 25, 2020, Briefing Room, Seoul City Hall)

    Briefing by the Seoul Metropolitan Government (10:00 AM, March 25, 2020)

    <Current State of Confirmed Cases in Seoul and City’s Response>
    As of March 25, the number of confirmed cases of COVID-19 nationwide is 9,137, which shows an increase by 100 from the day prior. In Seoul, 13 new confirmed cases make the total 347. What is significant at the moment is that infections after overseas travels have increased as we see that the percentage of those who traveled to other countries among new confirmed cases is as much as 29%. Specifically, 9 out of 13 confirmed cases in Seoul recently entered South Korea from other countries and 3 confirmed cases are among their family members. Especially, countermeasures for those coming from the United States is pressing. Presently, approximately 1,300 people are entering South Korea from Europe and more than 2,000 from the United States.

    At the moment, the authorities only instruct travelers from Europe to self-quarantine. However, things can be worse concerning the United States. Self-quarantine should be enforced to every person who comes from abroad, including from the United States. As requested several times, we would like to receive a list of Seoul residents among those who are coming from foreign countries. When it comes to epidemics, it is better to overreact than procrastinate. As soon as we are offered the list, the Seoul Metropolitan Government will take action to ensure that every Seoul resident coming from abroad is self-quarantined.

    <Seoul’s 10-Day Commitment to Minimize Damages of Devastated Small Businesses>
    Confronting the prolonged state of emergency caused by the COVID-19 pandemic, citizens’ livelihoods have become extremely unstable like a candle flickering in the wind.
    Among all of us who are suffering, those who are most severely in crisis would be 660,000 small businesses in Seoul that have been playing a pivotal role in the nation’s economy. They are screaming, “This is worse than the IMF Crisis,” and “Sales have plummeted and I heave a deep sigh of concern about employee paychecks the moment I wake up.”

    If small businesses and the self-employed collapse, our economy will collapse. We must keep them survive. To this end, the Seoul Metropolitan Government has created the “COVID-19 Emergency Business Stabilization Fund” (KRW 500 billion) starting in February, during the early stage of the COVID-19 outbreak, to provide low-interest (up to 1%) loans.

    < 1. Wide Expansion of Credit Supply >
    However, we decided that this measure was not sufficient. The current scale is not even close to solving the desperate situation that is threatening small businesses toward tightness of capital and bankruptcy. Therefore, the Seoul Metropolitan Government has resolved to drastically expand the credit supply to KRW 5 trillion 90 billion.

    It is the total amount that Seoul can mobilize to the fullest. As announced previously, this is the second emergency support policy, following the “Seoul Disaster Fund for Household Support” for households whose members make less than 100% of the median income.

    < 2. Shortened Processing Period with Streamlined Procedures >
    What matters is how fast we can move.

    In an emergency, urgent measures are required. The Seoul Metropolitan Government has prepared a special countermeasure for small businesses in urgent need to promptly receive business stabilization funds. It is called the “10-day commitment.”

    Our “10-day commitment” promises the construction of an “innovative surety process,” where the required period from surety consultation to loan can be greatly shortened so that money can be transferred to applicants’ bank account within 10 days from the point of their application. To enable this plan, the Seoul Metropolitan Government will cooperate with its primary banks including Shinhan Bank and Woori Bank to greatly increase personnel to take charge of surety-related tasks and innovate the surety support system.

    To keep our 10-day commitment, we will reform our system as follows:

    First, the city will dualize the steps in the surety process.
    Shinhan Bank and Woori Bank will take charge of consultations and applications, and the Seoul Credit Guarantee Foundation will be responsible for surety examinations. 564 branches of the city’s primary banks, Shinhan Bank and Woori Bank, will be designated as the “special window for Seoul’s innovative funds for people’s livelihoods,” where the dedicated officials will be deployed to handle every step except the surety examination process. The Seoul Credit Guarantee Foundation will only be concentrating on surety examination and this strict division of work will lead to a fivefold faster process.

    Second, the city will offer a one-stop solution for visit procedures.
    We have made a bold decision to forgo the procedure of requiring applicants to visit banks and the Seoul Credit Guarantee Foundation three to four times on average to receive loans. The “one-stop package process” will be available where applicants can receive the consultation service and submit the documents at the same time at any “special window for Seoul’s innovative funds for people’s livelihoods” of their local bank.

    Third, the city will recruit 300 temporary workers to take exclusive responsibility for surety examination at the Seoul Credit Guarantee Foundation.
    Experienced bank retirees will be deployed in its 22 branches. By doing so, we will conduct 32,000 pending surety examinations in a short period of time and address the congestion for surety examinations until April 15.

    We may see a delay in the earliest stage of this implementation as there can be spikes in the number of applicants following this announcement. Seoul will use the entire available human resources and methods to stick to the “10-day commitment.”

    We are fighting in a long war against COVID-19. We should make this crisis of war into an opportunity–an opportunity for innovation. Seoul will break through the battle against COVID-19 with an innovative reformation of its administration.

    Starting with the “10-day commitment” through the expansion of credit supply and the financial innovation for citizens’ livelihoods that is announced today, the Seoul Metropolitan Government will continue its innovative administration for small businesses. Together, we will seek ways to make it through instead of losing hope.

    War always leaves pain and wounds, but we will win this war in solidarity with cooperation. Seoul will always be on the front line of this battle.

    A vaccine for the city of Seoul is its unwavering citizens. Thank you.