Rental Factory Utilization Guide for Small-Scale Manufacturing Startups

While building a factory directly would be most ideal, realistically it's often difficult to invest hundreds of millions to billions of won in the startup phase. Using rental factories can significantly reduce initial capital burden while starting manufacturing. Especially in 2026, government support for SMEs has expanded to record levels, creating many opportunities.

Rental factory types are broadly three categories. First are general rental factories, leasing existing factory buildings. By leasing facilities with factory registration, manufacturing can begin with only business registration and factory registration changes without separate factory establishment permits. Second are knowledge industrial centers (formerly apartment-type factories). Knowledge industrial centers under Article 28-2 of the Industrial Cluster Act are concentrated facilities for manufacturing, IT, and R&D companies, allowing use of small units through sales or lease.

Third are the recently emerging shared factories (shared manufacturing facilities). As part of the smart manufacturing innovation project promoted by the Ministry of SMEs and Startups, facilities allowing hourly use of shared equipment and facilities are increasing. This is particularly suitable for startups in the prototype production or small-volume production stage.

In terms of funding support, 2026 is a particularly good year. The Ministry of SMEs and Startups' startup support project budget is KRW 3.4645 trillion (5.2% increase from previous year), the largest ever, operating 508 projects through 111 institutions. SME policy funds also allocated KRW 4.4313 trillion, with over 60% prioritized for non-metropolitan companies.

Support in Gyeongju and Gyeongbuk regions is even more substantial. Gyeongju City is investing a total of KRW 261.6 billion in SME working capital interest subsidy projects. This combines Gyeongju City's own budget of KRW 106.6 billion, Gyeongbuk Province KRW 35 billion, Ministry of SMEs cooperation KRW 20 billion, and KHNP KRW 100 billion. This project subsidizes part of interest when SMEs borrow from commercial banks, significantly reducing actual financial costs.

Smart factory introduction can also utilize government support. In the 2026 smart factory dissemination project, up to 50% of project costs are supported for AI-based systems, and up to 30% for large-small cooperation smart factories. Applying digital technologies like AI and IoT from the beginning can secure both productivity and competitiveness.

Things that must be confirmed when contracting rental factories: Check whether the facility allows factory registration, whether manufacturing of your industry is permitted in the zoning, and whether fire safety and environmental facilities meet standards. Particular caution is needed as there are cases of leasing 'fake factories' where factory registration is actually impossible.