Credit delinquents denied entry into program for failed startups
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FEBRUARY 26, 2013 08:23.
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"This is the job of the Small and Medium Business Administration. However, the administration helped some recover while banning chances for others in participating in the project."
Lee, the head of small food company, gave a deep sigh while talking about his experience last year. His business went bankrupt in 2007 under 300 million won (276,370 U.S. dollars) of debt, causing him to become a credit delinquent.
Trying to recover by setting up a company making functional food in 2010, he received capital support of 200 million won (184,246 dollars) from the Small and Medium Business Corp. under the Small and Medium Business Administration. His company then set up a mass production process and was ready to start.
A host of obstacles followed, however. His application to take part in a project led by the corporation that supports the acquisition of foreign certificates, including approval from the U.S. Food and Drug Association and the European CE mark, was rejected because he was a credit delinquent. A client promised to sign a contract upon getting the certificate, but Lee failed to get it despite hard efforts. To get the certificate, tens of thousands of dollars are needed if the corporation does not help, not to mention additional staff.
The small business corporation began helping troubled companies in 2010 to help them make a comeback. Credit delinquents can also apply if they have outstanding technology and a certain degree of business experience.
The screening procedure is tough, however. Applicants are rejected if they intentionally file for bankruptcy, embezzle money, or are engaged in corruption scandal. The corporation also evaluates the ethics of entrepreneurs, and the Credit Counseling and Recovery Service also participates in the screening.
Undergoing such procedures, 131 among 231 companies that applied, or 56.7 percent, received funds to restart worth a combined 20 billion won (18.42 million dollars). An average 150 million won (138,185 dollars) was given to each company.
