The government is set to implement an artificial intelligence (AI)-based crisis alert system to detect early signs of distress in 250,000 small businesses, facilitating swift responses.
On July 8, the Ministry of SMEs and Startups announced a 'Support Plan for Small Business Recovery' during a joint meeting of the Emergency Economic Headquarters and the Ministerial Meeting on Economic and Industrial Competitiveness.
According to Korea Evaluation Data (KODATA), the proportion of marginal small businesses rose from 6.5% in 2020 to 7.9% in 2022, and is projected to reach 8.8% by 2024. The ministry's analysis indicates that approximately 55,000 companies, nearly half of the total, are experiencing or showing signs of crisis in terms of growth and finances.
Among financially distressed companies, 45% of marginal firms are seeing increased sales, suggesting that with structural improvements, some could return to normal operations.
In response, the government plans to establish a new recovery system that identifies crisis situations early and provides tailored support based on the type of crisis, focusing on companies with high growth potential and normalization prospects.
Specifically, the Small and Medium Business Corporation will expand its early warning management from 60,000 loan companies to all 250,000 small businesses, implementing an 'AI-based Small Business Crisis Alert System' that detects signs of growth and financial crises. The system will analyze not only financial and economic data but also unstructured data such as news and industry trends to identify crisis signs at both the individual company and regional or industrial levels.
The crisis alert index for each company will be categorized into four levels: normal, caution, preliminary alert, and alert. Companies at the preliminary alert and alert stages will receive notifications about their crisis status and information on recovery support programs via text messages and social media.
The criteria for assessing structural improvement support will be revised to focus on normalization and growth potential, with streamlined funding evaluation processes and preferential loans for companies with strong performance in implementing management improvement plans.
Starting in the second half of this year, the financial sector will introduce a 'Coexistence Finance Index' that evaluates support efforts for small businesses and self-employed individuals, incorporating the 'proportion of small business debt adjustments' to encourage participation from financial institutions. Additionally, priority support will be given to new business areas linked to the five major growth engines and regional key industries, promoting transitions to promising new sectors.
The performance management approach, which previously only assessed the success or failure of business transitions, will be restructured to a 'milestone' system that provides differentiated support based on annual goal achievements and outcomes. A collaborative business transition model will also be introduced, connecting the new business plans of anchor companies with small and medium enterprises in the supply chain to drive overall industrial ecosystem transitions.
Considering the characteristics of transitioning businesses, the government will facilitate local investment subsidies even if existing operations are downsized, provided that the scale of new investments is larger. For companies approved for new business transitions, the duration of stay for specialized foreign workers (E-7) will be extended from three years to five years.
Earlier, in March, the Ministry of SMEs and Startups launched the 'Small Business Crisis Alert Talk' service to proactively manage management crises among small businesses and assist in their recovery.
Deputy Minister of SMEs and Startups Roh Yong-seok stated, "Through this plan, we will concentrate our policy capabilities and resources to help small businesses with growth potential overcome crises through structural improvements and new business transitions, securing new growth engines."
* This article has been translated by AI.
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