'Reform of the Small Business Policy Fund Repayment Extension System'
Support Decision After Confirming Management Difficulties and Repayment Feasibility
The repayment period for small business policy funds will be extended up to a maximum of 5 years.
The Ministry of SMEs and Startups announced on the 15th that it has completed the reform of the 'Small Business Policy Fund Repayment Extension System' and will begin accepting applications from the 16th.
Debtors who are currently using the Small Business Policy Fund (direct loans) from the Small Enterprise and Market Service and are making regular repayments can apply for a repayment extension. If business difficulties and repayment feasibility are confirmed, small business owners can receive an additional principal and interest repayment period for up to 5 years (60 installments) according to their desired duration.
The eligibility criteria regarding business duration and outstanding balance have been abolished to expand the pool of applicants. The interest rate calculation method applied after the repayment extension support has been rationalized to minimize interest burden, thereby lowering the application threshold as much as possible.
If the borrower is overdue, they can apply after resolving the overdue status; if only interest payments are being made, they can apply after making the first installment of principal and interest repayment when the principal repayment is due. Additionally, even if support has already been received as an existing intensive management company, additional applications are possible as long as the total extension period does not exceed 5 years. However, applications are restricted if the business is closed or suspended, or if other public adjustments such as the New Start Fund debt restructuring have been applied for or are in use.
Business difficulties are recognized if the borrower is a multiple debtor, has a medium to low credit rating (NCB 839 or below), or has experienced a sales decrease of 10% or more compared to the previous period, or if the Small Enterprise and Market Service has already detected signs of insolvency and is monitoring the company.
Repayment feasibility is assessed through a repayment plan submitted by the small business owner at the time of application, evaluating business capability and willingness to improve management. Final support is decided when repayment feasibility is recognized. Even if business difficulties and repayment feasibility are not recognized at the time of application, reapplication is possible after 3 months if the conditions are met later.
Once support is approved, an additional installment repayment period of up to 5 years (60 installments) will be added. For example, if the original principal and interest installment repayment period was 3 years, adding 5 years will convert it to 8 years. After the repayment extension, the interest rate will increase by 0.2 percentage points from the existing contracted rate.
Oh Young-joo, Minister of SMEs and Startups, said, “With the reform of the repayment extension system, all three financial support measures announced last month in the comprehensive plan for small business owners and self-employed have been launched,” adding, “We will carry out the three measures smoothly to help alleviate the financial burden of small business owners who are struggling with loan repayments.”
Applications for repayment extension support can be submitted from 10 a.m. on the 16th through the Small Business Policy Fund website, the Sangsaengnuri website, and 77 Small Enterprise and Market Service support centers nationwide.
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