Sosangongin 119 Plus Applications Open from the 18th
Up to 10-Year Long-Term Installment Repayment for Business Loans
A debt adjustment program for small business owners facing difficulties in repayment or hardships due to business suspension will be implemented. The Korea Federation of Banks announced that starting from the 18th, the tailored debt adjustment program for banks, 'Sosangongin 119 Plus,' can be applied for at bank branches nationwide. For internet banks, the program will be implemented through non-face-to-face methods after the end of April.
This program is a follow-up measure to the 'Banking Sector Small Business Financial Support Plan' jointly announced last December by the banking sector, the Financial Services Commission, the Ministry of SMEs and Startups, and the Financial Supervisory Service. It is an expanded and strengthened version of the currently operating 'Individual Business Loan 119 Program,' supporting small business borrowers at risk of delinquency to avoid falling into delinquency by providing long-term installment repayment for up to 10 years (5 years for unsecured credit, 10 years for secured credit) and interest rate reductions. Only small businesses with annual sales under 2 billion KRW, total assets under 1 billion KRW, and bank credit under 1 billion KRW are eligible for support.
Support has shifted from mainly maturity extensions to installment repayments for up to 10 years. Although the recalculated interest rate during debt adjustment (long-term installment repayment, maturity extension, etc.) is generally higher than the existing loan interest rate, a benefit is also provided to reduce the interest rate so that the applied rate during debt adjustment does not exceed the existing loan interest rate.
The scope of support has also been expanded. The support target, previously limited to individual business owners, has been extended to include corporate small business owners. The criteria for delinquency risk have been quantified and subdivided to enable faster and more systematic support, according to the Korea Federation of Banks.
However, some industries and loans are excluded from the program. These industries include the manufacturing of gambling machines and other unhealthy amusement devices related to gambling, and entertainment bars. Loans such as interest-advance loans (accounts receivable secured loans, discounted bills, etc.) and loans related to derivative products are excluded.
The banking sector will regularly review the program’s performance together with financial authorities to ensure smooth operation and will consult with related institutions to expand support targets, including guarantee-backed loans. After implementing this program, other programs such as support for closed businesses and the Hae-sal-loan 119 will be sequentially implemented.
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