Government Pushes to Cut SME Support Budget by 16%… "Cleansing Up Small-Scale and Handout-Style Programs"
Date
Aug 11, 2026
Classification
- Policy/Regulation
Seventeen ministries and agencies, including the Ministry of SMEs and Startups, have set a target of cutting 4.2 trillion won—16% of the budget for SME support programs. Similar or overlapping programs, small-scale and fragmented support, and programs with poor execution records are first in line for cuts. The savings will be reinvested in support for companies with strong growth potential, new industries, and areas outside the Seoul metropolitan region.
The government is launching a restructuring effort to cut 4.2 trillion won from SME support program budgets spread across multiple ministries and reallocate the remaining funds to targeted support at each stage of growth.
Target: 16% cut to budgets across 17 ministries and agencies…criteria for cuts: 'similar, overlapping, small-scale, and low-performing'
The government is undertaking a comprehensive overhaul of SME support program budgets spread across 17 ministries and agencies. It aims to cut 4.2 trillion won, or 16% of the total budget, by restructuring similar and overlapping programs, small-scale and fragmented support, and programs with poor execution records. The savings are to be reinvested in support for companies with strong growth prospects, new industries, and areas outside the Seoul metropolitan region. In a work report on the 4th, the Ministry of SMEs and Startups identified an initiative to untangle SME policies—revisiting SME support programs, startup regulations, and corporate data management systems—as a reform priority for the second half of the year. The key is to move away from a model in which different ministries run similar programs independently and distribute funding broadly, and instead realign policies around growth, performance, and region.
The stated criteria for cuts include similar or overlapping programs, small-scale, scattershot support, and low-performing or routine programs. The funds freed up will be reinvested in innovative companies with strong growth potential, regions, and safety nets for small business owners. The plan is to shift the policy focus from broadly distributing support to a 'growth ladder' spanning startup, growth, expansion, and a fresh start.
New third Jump-Up tier…up to 40 billion won per company over five years in five emerging growth sectors
The reduced budget will go toward large-scale, long-term support for a smaller number of companies. The Ministry of SMEs and Startups will foster global innovators in emerging growth sectors through a multi-year, large-scale, bundled support strategy, with three programs tailored to companies’ growth stages: Jump-Up (promising SMEs), Jump-Up 500 (mid-sized companies), and Jump-Up 1000. Newly launched this year, Jump-Up 1000 targets prospective mid-market companies. Companies in five emerging growth sectors will receive up to 40 billion won over a maximum of five years, and six additional startup cities will be designated.
First Vice Minister of SMEs and Startups Noh Yong-seok said that the past six months had been a period of focusing policy efforts on the innovative growth of SMEs and venture companies. He added that in the second half of the year, the ministry would build a foundation for sustainable growth by establishing a growth ladder and spreading the benefits of growth.
Changes to regulations are also in the works. The Ministry of SMEs and Startups will assess in advance how newly introduced regulations could affect startups’ market entry and growth, and identify regulatory hurdles with organizations such as the Korea Startup Forum and the Korea Venture Business Association, as well as the National Assembly. It will screen regulations affecting aspiring founders participating in 'Entrepreneurship for All' and establish a Startup and Venture Business Special Committee under the Regulatory Reform Committee in the second half of this year to discuss startup-related regulations separately.
Social Venture League closes on the 19th…aspiring founders can also apply
Separate from the restructuring effort, an application window is currently open. The Ministry of SMEs and Startups is accepting applicants for 'Entrepreneurship for All: Social Innovation Social Venture League' from July 30 through August 19. Aspiring founders with solutions to social problems and startups established within the past seven years may apply. Around 100 companies will be selected through a document review and receive 2 million won each to support impact activities. Around 40 companies selected through presentations will receive intensive mentoring worth 5 million won per company, with impact guarantees also available upon request. Finally, around 10 companies will be chosen through public presentations during '2026 Venture Week' in December and receive up to 150 million won in commercialization funding. Applications must be submitted online via the Korea Technology Finance Corporation’s ONE platform by 6 p.m. on August 19.
The five eligible challenge areas are addressing gaps in community care; expanding employment and social participation; improving energy costs and efficiency for small businesses and vulnerable groups; boosting productivity and innovation capacity among small business owners and SMEs using AI; and promoting resource circulation and solving waste problems. The second round of Entrepreneurship for All, a key initiative for the second half of the year, will receive approximately 200 billion won in supplementary budget funding and plans to select 10,000 applicants—twice the 5,000 selected in the first round. Applications, delayed due to a personal data breach, are expected to reopen in mid-August.
The government’s stated direction is not to change the overall amount of support, but to change how it is allocated. Programs that spread small sums broadly have been targeted for cuts, while a system is being created in which large amounts of funding are concentrated on selected companies over multiple years. For early-stage startups, this means fewer programs to apply to, but larger awards when selected. Rather than spreading applications across many programs, it has become important to focus on a smaller number of opportunities where the chances of selection are higher.
#MinistryOfSMEsAndStartups #StartupSupportPrograms #BudgetRestructuring #SocialVentureLeague #GrowthLadder
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