4 in 10 SMEs struggle with cash ahead of Chuseok, survey finds

Small and medium-sized enterprises face an average shortfall of 58.48 million won ($42,700) ahead of this year's Chuseok holiday, with four in 10 firms saying their financial situation has worsened compared to last Chuseok, a survey showed Thursday. Sluggish sales, rising raw material costs and tight bank lending conditions were cited as the main obstacles to securing funds.

The Korea Federation of SMEs released the results of its "2026 SME Chuseok Funds Demand Survey" Thursday, based on responses from 1,000 small and medium-sized enterprises surveyed from Sept. 1 to Sept. 7. The sample included 600 small merchants, 100 small enterprises and 300 medium-sized enterprises, split evenly between manufacturing and non-manufacturing sectors at 500 firms each.

The survey found that firms need an average of 256.45 million won per company for the Chuseok period this year, of which an average of 58.48 million won remains unsecured — about 22.8 percent of total funds needed.

Some 40.0 percent of respondents said their financial situation was more difficult compared to last Chuseok, while 12.9 percent said conditions were favorable. The remaining 47.1 percent said their situation was unchanged from a year earlier.

Among firms reporting tighter finances, weak sales and revenue were the most commonly cited reason at 71.5 percent, followed by rising raw material and component costs at 59.5 percent, higher labor costs at 21.8 percent and delayed payment collection at 12.8 percent. Respondents could select multiple answers.

To cover the shortfall, firms said they were accelerating payment collection from buyers or taking on additional debt. Early collection of outstanding payments was the most common approach at 40.6 percent, followed by borrowing from financial institutions at 38.3 percent and deferring their own payments at 29.9 percent.

Access to financing through banks and policy lenders also remained strained. Some 27.0 percent of respondents said borrowing conditions through banks and policy financial institutions had become more difficult than last Chuseok — more than double the 12.6 percent who said conditions had improved. Another 60.4 percent said conditions were similar to a year ago.

A third of firms — 33.3 percent — said they encountered difficulties securing bank loans. High lending rates were the biggest obstacle, cited by 56.5 percent of those respondents, followed by insufficient loan limits at 41.1 percent and tightened collateral requirements at 22.5 percent.

Some 45.1 percent of firms said they planned to pay Chuseok bonuses, while 38.5 percent said they would not and 16.4 percent had yet to decide. Among companies paying bonuses as a percentage of base salary, the average payout was 37.7 percent of basic pay, while firms paying fixed-amount bonuses