Repeal of Waiting Period for Good-Faith Failed Entrepreneurs to Restart Same Business

Government Expands Path for 'Sincere Failure' Entrepreneurs to Rechallenge... Extends Support for Re-establishment in Same Industry A message of hope has been delivered to entrepreneurs striving to rise again after setbacks. The government has injected new vitality by passing an amendment to significantly expand opportunities for entrepreneurs who have experienced sincere business failures to re-establish their businesses. The partial amendment to the 'Enforcement Decree of the Act on Support for Small and Medium Enterprise Start-ups,' passed at the Cabinet meeting on the 4th, focuses on encouraging a challenging spirit that does not fear failure and helping to ensure that accumulated experience is not wasted. The core of this amendment is to establish a legal basis allowing entrepreneurs who have experienced 'sincere business failure' to be recognized as legitimate 'start-ups' even when re-establishing their businesses in the same industry, without being constrained by the period of closure. Under the previous system, the threshold for re-establishing a business in the same industry was high. If a business was re-established in the same industry within three years of closure (two years in cases of bankruptcy or insolvency), it was not recognized as a start-up, leading to the limitation of being excluded from various government support programs. This has served as a major barrier to re-establishment, posing a double difficulty for entrepreneurs seeking to make a comeback by leveraging their accumulated experience and know-how in the same industry. However, the situation is now changing. According to the amendment, if an entrepreneur who has experienced sincere business failure is recognized as possessing excellent 're-establishment capabilities' through the introduction of new business models, utilization of new technologies, etc., they can be legally recognized as a 'start-up' regardless of the period of closure or whether it's the same industry. The key is the evaluation of 're-establishment capabilities.' This will be multi-dimensionally verified through rigorous sincere management evaluation and in-depth sincere management evaluation, reflecting the government's commitment to support genuine innovative intent and well-prepared re-challenges, not indiscriminate re-establishments. This amendment is scheduled to take effect in June, allowing entrepreneurs recognized for their re-establishment capabilities to fully access a wide array of start-up support programs operated by the central government and local autonomous bodies. As of 2025, this opens the way to participate in 429 programs promoted by no less than 101 organizations. This is expected to play a crucial role in enabling re-establishing entrepreneurs to achieve a successful rebound by receiving support for essential resources needed in the early stages of their business, such as funding, technology, and human resources. Cho Kyung-won, Director-General for Start-up Policy at the Ministry of SMEs and Startups (MSS), emphasized the importance of this amendment, stating, "By expanding re-establishment opportunities for entrepreneurs with excellent potential, it will provide real hope and a stepping stone for those who dream of rising again even amidst setbacks." He added, "We will continue to strive to create an environment where failed entrepreneurs can smoothly re-challenge without despairing, and ultimately build a healthy and virtuous start-up ecosystem." In fact, re-establishment accounts for a significant portion of the domestic start-up ecosystem. In 2022, the proportion of re-established businesses out of approximately 1.317 million total start-ups reached 29.6%. This shows that a considerable number of entrepreneurs are re-challenging with more robust business models, learning from their failures, and their successful comebacks can contribute to revitalizing the national economy. This amendment to the law is expected to go beyond mere institutional improvement, making a significant contribution to fostering a social atmosphere that tolerates failure and encourages re-challenges.