Ministry of SMEs and Startups sets record $13.1b budget for 2027

Budget of 18.07 trillion won marks 9.4% increase over this year

1.1 trillion won earmarked for growth, exports and AI transition

Mother Fund hits record 1.3 trillion won; R&D allocation reaches 2.6 trillion won

First Vice Minister and Acting Minister of the Ministry of SMEs and Startups Noh Yong-seok briefs reporters on the ministry's 2027 budget proposal at the Korea Federation of SMEs headquarters in Yeongdeungpo-gu, Seoul, on Monday. [Ministry of SMEs and Startups]

The Ministry of SMEs and Startups has drawn up its largest-ever budget for next year, allocating 18 trillion won ($13.1 billion) to expand support for small businesses and startups at every stage of growth — from founding through scaling, exports and second chances.

The 2027 budget proposal totals 18.07 trillion won, up 1.55 trillion won, or 9.4 percent, from this year's base budget of 16.52 trillion won, the ministry said Tuesday. The ministry will fund the increase by broadening interest-rate subsidies on loan programs and eliminating small-scale, scattershot support projects, redirecting those resources into priority initiatives.

Lowering barriers to startups, scaling up SMEs

In the startup space, the ministry has set aside 441.1 billion won for its "Everyone's Startup" program. This year, the program received a combined 263.1 billion won — 62.8 billion won in the base budget and 200.3 billion won through a supplementary budget. Next year's allocation is 178 billion won, or 67.7 percent, higher.

The number of beneficiaries will grow from 15,000 this year to 20,000 next year, and the average commercialization grant per recipient will rise from 20 million won to 30 million won. The existing Pre-Startup Package will be folded into the Everyone's Startup program starting next year, while the Early-Stage Startup Package and the Startup Leap Package will receive 46.9 billion won and 58.5 billion won, respectively.

Regional startup support will also be expanded. The ministry will create a new Regional Startup Package worth 170 billion won and increase the number of designated startup cities from four to 10. Startups based in, or planning to relocate to, those cities will be eligible for up to 500 million won in commercialization funding as well as local settlement costs.

Mother Fund hits record high; four growth sectors to receive concentrated investment

The government's contribution to the Mother Fund — the primary vehicle for seeding venture investment — will rise from 820 billion won this year to a record 1.3 trillion won next year, an increase of 480 billion won. Of that total, 240 billion won will go to an early-stage startup fund, 285 billion won to a regional growth fund, and 525 billion won to the Next-Generation Unicorn Project, which invests in new-security, AI and deep tech ventures.

In four designated new-growth sectors — new security, climate tech, pharmaceutical biotech and K-consumer goods — the ministry plans to identify 300 innovative companies and provide them with long-term bundled support. A new 10 billion won program will be created to nurture those firms.

The R&D budget for small and medium-sized enterprises will increase from 2.2 trillion won this year to 2.55 trillion won next year, a rise of 357.8 billion won. A newly created "SME Physical AI Demonstration Project," designed to support venture and startup companies in validating physical AI technologies and to help small manufacturers transition to AI-driven operations, will receive 172.8 billion won.

About 1.1 trillion won for growth, exports and AI transition

A combined 1.11 trillion won will be channeled into eight key programs supporting SME growth, export expansion and AI adoption — covering everything from scaling up small businesses and converting factory floors to AI-driven operations, to breaking into overseas markets.

The Jump-Up Program, which helps small businesses grow into mid-sized companies, will see its budget more than double from 59.5 billion won this year to 164.2 billion won next year. A new 54.3 billion won initiative will be created to accelerate the growth of promising SMEs within key industrial value chains. The budget for AI-centered smart factory deployment will rise from 403.6 billion won to 468.2 billion won, and 28.4 billion won will be newly allocated to train specialists in manufacturing AI.

Export support will be significantly expanded. The Export Support Infrastructure program will receive 313.7 billion won — more than double this year's 150.2 billion won. The existing export voucher scheme will be restructured to better address market-entry barriers and provide more tailored support by growth stage. Programs for joint overseas expansion between large and small companies, and for responding to foreign export regulations, will receive 23.8 billion won and 27.9 billion won, respectively, while a new marketing growth support package worth 28.6 billion won will also be launched.

SME policy loans reach 4.4 trillion won; second-chance support expanded

SME policy loans will be streamlined into four categories — startup companies, growth-stage companies, business recovery support and management stabilization. The total policy loan pool will expand from 4.07 trillion won this year to 4.4 trillion won next year. Combined with interest-rate subsidies on 1 trillion won in private-sector loans, total financial support will reach approximately 5.4 trillion won.

Support for entrepreneurs who have experienced failure will also be strengthened. The ministry will create a new 59.5 billion won Second-Chance Success School and a 33.4 billion won Second-Chance Encouragement Project, while the existing Second-Chance Success Package will grow from 15 billion won this year to 46.9 billion won next year.

Stronger safety net for small business owners; traditional market support expanded

The ministry will strengthen the social safety net for small business owners. A new 30 billion won tailored policy insurance program will be created to cover young business owners — those who have been operating for fewer than five years — from temporary closure through permanent shutdown and business restart. The Hope Return Package will expand from 305.6 billion won this year to 315.3 billion won next year. A new 205 billion won health care support program will also be introduced to cover the cost of temporary closures for medical checkups and wages for replacement workers.

Financial support for small business owners will be restructured: the general management stabilization fund will be converted into an interest-rate subsidy on 2 trillion won in loans, and combined with 2.25 trillion won in direct lending, total financial support will reach 4.25 trillion won. The ministry will also allocate 124 billion won to support a shared online food delivery platform aimed at reducing the dominance of private delivery platforms and easing the financial burden on small business owners.

The budget for the Traditional Market Safety Management Package will more than quadruple, rising from 13.2 billion won this year to 56.2 billion won next year, while 42.7 billion won will be set aside for traditional market development programs.

"We reviewed the ministry's support programs from the ground up and carried out bold expenditure restructuring, with the budget focused squarely on enabling genuine growth for small and medium-sized venture companies and small business owners," First Vice Minister Noh Yong-seok said.

boo@heraldcorp.com