Up to 3-Year Maturity Extension and Up to 1-Year Repayment Deferral Additional Support
[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Lee Young) announced on the 3rd that, in line with the extension of maturity extension and repayment deferral measures across all financial sectors, the Ministry's policy financial institutions will provide additional support to borrowers currently using maturity extension and repayment deferral measures. The target institutions are the Small and Medium Business Corporation, the Small Enterprise and Market Service, the Korea Technology Finance Corporation, and the Regional Credit Guarantee Foundations.
The Ministry's policy financial institutions have implemented special maturity extension and repayment deferral measures since April 2020 to alleviate the repayment burden on small and medium enterprises and small business owners due to the spread of COVID-19, supporting a cumulative total of 79 trillion KRW (1.46 million cases), including 2.7 trillion KRW in loans and 76.5 trillion KRW in guarantees, until the end of August this year.
As the existing measures are scheduled to end at the end of September, the Ministry of SMEs and Startups formed a 'Maturity Extension and Repayment Deferral Soft Landing Consultative Body' together with the Financial Services Commission, the Financial Supervisory Service, and the financial sector since July, and prepared additional support plans. For the Small and Medium Business Corporation and the Small Enterprise and Market Service, maturity extension will be provided to borrowers currently receiving maturity extension and repayment deferral without partial repayment or interest rate increases, granting a grace period in one-year increments for up to three years until September 2025.
Repayment deferral will be additionally supported until September 2023 on the condition of normal repayment agreements. For companies wishing to defer repayment, principal repayment deferral will be supported in the first phase until the end of March 2023, and thereafter, for companies wishing to extend further, agreements to resume normal repayment will be signed starting in October and extended until the end of September. Repayment agreements will be set through one-on-one consultations considering the company's intentions and repayment capacity, establishing installment repayment schedules of up to three years for working capital and up to six years for facility funds after October 2023.
For guarantees linked to commercial bank loans provided by the Korea Technology Finance Corporation and the Regional Credit Guarantee Foundations, maturity extension and repayment deferral measures will be supported in coordination with commercial banks as these measures are implemented through voluntary agreements within the financial sector. This measure will be operated by confirming the desire for maturity extension and repayment deferral one month before the existing measures end, and detailed information such as support criteria, target recipients, and application procedures can be found on the websites of each policy financial institution.
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