Banks to Launch Support Programs for Closed Business Owners and Small Entrepreneurs

Refinancing with Low-Interest, Long-Term Installment Household Loans
Up to 20 Million Won Limit for Sunshine Loan 119

Banks have announced plans to introduce products aimed at easing the debt burden for business owners who have closed their businesses, and to support the recovery of sole proprietors who have faithfully fulfilled debt restructuring agreements.

According to the Korea Federation of Banks on April 27, the banking sector will launch the Support Program for Closed Business Owners and the Sunshine Loan 119 on April 28 and April 30, respectively. For internet banks, the support program for closed business owners will be implemented after May. The Sunshine Loan 119 will also be launched in May at internet banks as well as SC First Bank, Busan Bank, Kyongnam Bank, and Jeju Bank.

The support program for closed business owners will allow small business owners who are planning to close or have already closed their businesses to refinance their existing business loans into low-interest, long-term installment household loans, with a two-year grace period. This is intended to ease the initial burden of principal repayment. In particular, small borrowers with credit or guaranteed loans with a balance of 100 million won or less will receive an interest rate benefit of about 3%. For unsecured loans of 100 million won or less, a maximum repayment period of up to 30 years is available.

Eligible applicants are small business owners who are planning to close or have already closed their businesses and have business loans (credit, regional credit guarantee foundation-guaranteed, or real estate-secured loans) that are being repaid normally. However, loans disbursed after December 23 of last year, the date the support plan was announced, are excluded, and new business loans are also restricted. Applications will be accepted starting April 28, and the program will be operated temporarily for three years from the implementation date.

The Sunshine Loan 119 is designed to help small business owners obtain new business funds so that they can avoid illegal private lending and settle into the institutional financial system. The program is available to sole proprietors with annual sales of 300 million won or less who have been participating for at least three months (with no delinquency at the time of application and submission) in either the Business Loan 119 or the Customized Debt Restructuring Program (Small Business Owner 119 Plus).

Borrowers can receive support up to a maximum of 20 million won per person. After applying for and using the initial loan (up to 10 million won), borrowers can apply for and use an additional loan (up to 10 million won) following a comprehensive consultation. Funding for the program will be provided by the Korea Inclusive Finance Agency, with 10 billion won contributed annually for three years.

Banks plan to provide information about these programs through online and offline channels, as well as through government publicity, and will offer tailored guidance to eligible closed business owners. In cooperation with financial authorities, the banks will regularly monitor the operational performance of these programs in the field and will continue to make necessary institutional improvements.