The Same-Type Startup Rule Will Allow Government Support After Just One Year

[Financial News] A sole proprietor who closes a business and later starts again in the same industry will be eligible for government startup support after just one year. Under the previous rule, they had to wait three years after closing the business before being recognized as a startup and applying for government support.
According to the Ministry of SMEs and Startups (MSS) on the 25th, the State Council of South Korea approved an amendment to the Enforcement Decree of the Support for Small and Medium Enterprise Establishment Act that shortens the period during which a restart in the same industry is not recognized as a startup.
Under the current law, to prevent duplicate benefits from startup support programs, a sole proprietor who closes a business and then establishes a new sole proprietorship or corporation in the same industry can participate in government support programs only after three years have passed since closure.
However, as the startup environment is changing rapidly with artificial intelligence (AI) and technology convergence, concerns have been raised that the three-year period is too long and restricts quick reentry into business.
In response, the MSS decided to shorten the period during which a restart in the same industry is not recognized as a startup from three years to one year, taking into account that the actual preparation period for such a restart is about 11 months.
The revised decree is expected to take effect next month. Even companies that began business before the revision will be able to apply the updated startup recognition standards if they have not yet reached seven years since starting operations.
Jo Kyung-won, Director General for Startup Policy at the MSS, said, "This revision to the decree is expected to minimize the gap after failure, encourage re-startups, and create a virtuous cycle in the startup ecosystem." He added, "We will continue improving the system to promote startups by reflecting voices from the field."
[email protected] Kim Hyun-chul Reporter