Government Shortens Re-entry Restriction Period for Restarting Same Business from 3 Years to 1 Year

The restriction period for recognizing a business startup when restarting in the same industry after closure will be shortened from three years to one year, enabling entrepreneurs to participate in government startup support programs more swiftly.

The Ministry of SMEs and Startups (MSS) announced that the amendment to the Enforcement Decree of the Small and Medium Enterprise Startup Support Act, which shortens the non-recognition period for restarting the same type of business after closure, was approved at a Cabinet meeting today (the 25th).

Under current laws, to prevent overlapping benefits from startup support programs, when a sole proprietor closes a business and establishes a sole proprietorship or corporate business in the same industry, three years must pass after closure before the venture is recognized as a startup and permitted to participate in government support programs.

However, amid rapidly changing startup environments such as artificial intelligence (AI) and technological convergence, opinions were raised that a three-year period is excessively long and restricts prompt business restarts.

In response, considering that the actual preparation period required to restart the same type of business is approximately 11 months, the ministry decided to reduce the startup non-recognition period for the same industry from three years to one year.

The amended enforcement decree is scheduled to take effect starting next month. Even for businesses that commenced operations prior to the enforcement, those that have not yet passed seven years since their business commencement will be eligible for the revised startup recognition criteria.

Cho Kyoung-won, Director General for SME Policy at the ministry, stated, "We expect this amendment to the enforcement decree to minimize the gap period following failure, revitalize business restarts, and foster a virtuous cycle within the startup ecosystem," adding, "We will continue to improve policies to promote startups by reflecting voices from the field."

(Photo: Provided by Ministry of SMEs and Startups, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.