The Ministry of SMEs and Startups and the Korea SME and Startups Agency (KOSME) announced on January 3 that they will begin accepting applications for growth-sharing policy funds starting January 4, under the "2026 SME Policy Fund Loan Plan." The total investment and loan support for 2026 amounts to 110 billion won ($75 million), comprising 60 billion won in growth-sharing loans and 50 billion won in investment-contingent loans.
Growth-sharing loans operate by having KOSME acquire convertible bonds (CB), redeemable convertible preference shares (RCPS), or convertible preference shares (CPS) from companies with strong growth potential and high likelihood of initial public offering. Each company can receive up to 2 billion won. The program will prioritize companies unknown to private investment markets, firms located outside the Seoul metropolitan area, and early-stage startups to address venture investment imbalances.
Investment-contingent loans function as bridge loans to help startups overcome the "valley of death" by filling funding gaps between initial and follow-up investments. KOSME has been accepting applications for these loans since January. The agency plans to provide large-scale, low-interest loans primarily to companies with strong technology capabilities but unproven financial performance, offering growth opportunities to promising firms.
Eligible applicants are companies that have received venture investments of 100 million won or more from investment institutions within the past 24 months from the application date. When KOSME provides loan support, it receives stock warrants equivalent to 5% of the total loan amount. Supported companies must repay loans early using investment proceeds when they secure follow-up funding.
"Growth-sharing loans and investment-contingent loans are policy financing focused on companies' future value and growth potential," said Kang Seok-jin, Chairman of KOSME. "We will further strengthen funding support at each growth stage so that startups can overcome the valley of death and attract private investment."