Early Implementation of 'Saechulbal Gigeum' Expansion Plan on the 12th... Additional System Improvements

Allowing Debt Restructuring for 'Daehwan Loans' Used to Repay Existing Loans
Debt Restructuring Also Allowed for Regional Credit Guarantee Foundation Guaranteed Loans

The Financial Services Commission announced on the 10th that it will advance the schedule for implementing the expanded New Start Fund plan, one of the comprehensive measures for small business owners and self-employed individuals, originally set for the end of September, and will begin early implementation from the 12th. Once the New Start Fund application is completed, even before the actual debt adjustment agreement is signed, collection efforts on the eligible debts will be suspended from the day after the application, allowing small business owners and self-employed individuals to enjoy a worry-free Chuseok holiday through their application.

According to the comprehensive measures for small business owners and self-employed individuals announced in July, the government will extend the business operation period eligibility for the New Start Fund support to the first half of this year, providing debt adjustment support to small business owners and self-employed individuals who were previously excluded. The application period is also extended until the end of 2026, offering debt adjustment opportunities through the New Start Fund even if defaults have not yet materialized, enabling more secure business operations.

Additionally, debt adjustment conditions will be preferentially applied when defaulters or closed business owners complete employment or re-startup programs to encourage systematic employment and re-startup. For example, those who complete the National Employment Support System or the Hope Return Package program will receive preferential principal reduction rates (up to 10 percentage points), with plans to continuously expand this through consultations among related ministries.

The Financial Services Commission plans to address blind spots in support for business recovery by implementing additional institutional improvements raised through on-site meetings with the chairman and analysis of civil complaints.

First, to prevent moral hazard, the debt adjustment criteria, which had been restricted, will be rationalized so that refinancing loans for the purpose of repaying existing debts will not be counted as new loans. Small new loans amounting to 30% or less of the loan will be included in the debt adjustment target.

Debt adjustment will also become possible for some policy products that were excluded at the launch of the New Start Fund due to institutional circumstances. Debt adjustment support will be provided for loans newly issued after August 29, 2022, by regional credit guarantee foundations under special guarantees for medium- and low-credit borrowers or bridge guarantees.

The number of institutions participating in agreements to allow debt adjustment through the New Start Fund regardless of the financial institution used will continue to expand. Mutual finance sectors such as Saemaeul Geumgo, which had relatively low participation, are being encouraged, and currently, 2,667 institutions have joined. This is an increase of 1,707 institutions compared to the 960 institutions at the launch in October 2022.

A Financial Services Commission official explained, "For inquiries about the application and detailed information on the expanded New Start Fund due to institutional improvements, please refer to the New Start Fund website or the Credit Recovery Committee website, or contact the New Start Fund call center or the Credit Recovery Committee call center for guidance."