Expansion of Low-Interest Refinancing for Self-Employed and Small Business Owners... Personal 100 Million KRW, Corporate 200 Million KRW

Loan Maturity Extended from 5 Years to 10 Years

The Financial Services Commission announced on the 9th that it will expand the 'Low-Interest Refinancing Program' starting from the 13th to reduce the interest burden on self-employed individuals and small business owners.

The program targets individual business owners or small corporate businesses. Individual business owners or small corporate businesses that are operating normally can apply for the low-interest refinancing program even if they have not received disaster relief funds such as loss compensation or extensions of maturity and repayment deferrals.

However, the eligible loans remain the same as before, limited to business loans issued before the end of May 2022. Industries related to gambling and speculative activities, real estate leasing and sales, finance, legal services, accounting, taxation, and other sectors excluded from small business policy funds are also excluded from eligibility, consistent with other programs.

The loan limit has been increased by 50 million KRW for individuals and 100 million KRW for corporations, raising the limits to 100 million KRW and 200 million KRW respectively. Self-employed individuals currently using the existing low-interest refinancing program can apply for additional refinancing within the increased limits.

Additionally, the loan maturity has been extended by 5 years to 10 years, and the repayment structure has changed to a 3-year grace period followed by 7 years of installment repayments. Since early repayment fees are fully waived, borrowers wishing to repay early can do so at any time.

The guarantee fee payment system, which allows annual fees to be paid in installments and is currently operated by some banks, will be expanded to all banks handling the refinancing program. Furthermore, the current annual guarantee fee of 1% will be reduced to 0.7% for the first three years, and if the guarantee fee is paid in full at the time of the initial loan, a 15% discount on the payment amount will be applied to reduce the burden.

The application deadline for the low-interest refinancing program has also been extended by one year, from the end of this year to the end of 2024.

The revamped low-interest refinancing program can be applied for either online or in person through 14 banks starting from the 13th. However, SC First Bank is currently undergoing system development and plans to implement the program from the 20th.

Meanwhile, the Financial Services Commission plans to allow loans with a 5-year maturity obtained through the existing low-interest refinancing program in the first half of this year to be converted to 10-year maturity loans under the new program.

Also, for self-employed individuals who raised operating funds through high-interest household loans during the COVID-19 period, only those confirmed to have suffered COVID-19 damages will be included in the refinancing target for household credit loans up to a certain limit, such as 20 million KRW. This plan is under discussion with related agencies and system development and is expected to be implemented in the third quarter.

The Financial Services Commission warned, “There have been cases of phone consultations being solicited through fraudulent special loan programs impersonating the government, banks, and public institutions, as well as random voice phishing (spam) text messages, so special caution is required.” They added, “Especially since household credit loans are currently not eligible for low-interest refinancing, if you receive suspicious messages or impersonations, delete them immediately and contact the relevant agencies to verify the facts and receive counseling for safety.”