1 Trillion KRW Policy Fund Cut — What Changes
In 2026, SME policy funds were slashed by over 1 trillion KRW compared to the previous year. This reflects both the government's fiscal soundness initiative and a policy shift from "survival support" to "growth support."
This isn't simple budget reduction — it's a strategic shift toward selective focus. Companies must accurately understand this change and redesign their funding strategies.
Key Changes in 2026 Policy Funds
Reduced Areas
Priority Support Areas
Support has actually expanded in government-selected areas:
| Field | 2026 Direction | Key Support |
|-------|---------------|-------------|
| AI & Digital Transformation | Major expansion | R&D, equipment, talent |
| K-Beauty & K-Culture | New expansion | Global expansion, marketing |
| Carbon Neutrality & Energy | Expanded | Equipment, certification, consulting |
| Semiconductors & Materials | Maintained/expanded | R&D, facilities |
| Bio & Health | Maintained | R&D, clinical trials |
Policy Direction Changes
Diversified Funding Strategies for SMEs
Strategy 1: Align with 'Priority Areas'
Focus on opportunities in priority areas rather than overall reduction amounts.
Execution:
- e.g., Manufacturing → "AI-based smart manufacturing", Distribution → "Data-driven retail innovation"
Strategy 2: Actively Use Policy Guarantees
While direct loans decreased, guarantee-based private lending is maintained or expanded.
| Guarantee Agency | Product | Coverage | Features |
|-----------------|---------|----------|----------|
| KIBO (Tech Guarantee) | Technology evaluation guarantee | Up to 90% | Technology-focused assessment |
| KODIT (Credit Guarantee) | General/special guarantee | Up to 85% | Credit rating based |
| Regional Credit Guarantee | Small enterprise guarantee | Up to 90% | For locally-based small firms |
Tips:
Strategy 3: Strengthen Private Investment Attraction
With government enhancing private investment matching, investment attraction capabilities matter more.
Investment Preparation:
Key Investment Channels:
Strategy 4: Leverage Export Finance
Financial support for exporters is actually expanding.
Key Export Finance:
Tips:
Strategy 5: Maximize Tax Benefits
With direct funding reduced, tax benefits become more important.
| Tax Benefit | Target | Deduction Rate |
|------------|--------|---------------|
| R&D Tax Credit | R&D performing companies | Up to 40% (SMEs) |
| Employment Increase Credit | New hires | 11~15M KRW per person |
| Investment Tax Credit | Facility investment | 10~16% |
| Startup Tax Reduction | Within 5 years of founding | 50~100% income/corporate tax |
Funding Checklist
KITIM Funding Strategy Consulting
KITIM provides comprehensive consulting for optimal SME funding strategy development.