Policy Loan 'Faithful Repayment' Small Business Owners to Get Reduced Repayment Burden

Ministry of SMEs and Startups Strengthens Safety Net for Small Business Owners
Special Installment Repayment Program Up to 7 Years
Monthly Repayment Reduced by Up to 600,000 Won

The Ministry of SMEs and Startups is launching a program to reduce the financial burden on small business owners. Special measures such as extending installment repayment periods and lowering interest rates will be provided to small business owners who have faithfully repaid policy finance loans and guarantees, even in difficult circumstances. The ministry also plans to introduce a long-term guarantee program for business owners who have closed their businesses and to expand the range of uses for the burden reduction credit.

According to the government on July 31, the Ministry of SMEs and Startups held a relay roundtable the previous day at the Jungbu Small Business Support Center in Jongno-gu, Seoul, to strengthen the recovery and safety net for small business owners, and announced these financial safety net support policies.

First, the ministry will implement a special package for small business owners with a record of faithful repayment, offering up to seven years of installment repayment and a 1 percentage point interest rate reduction on existing policy finance loans and guarantees. Based on the standard policy fund direct loan amount of 30 million won and an interest rate of 4.28%, the monthly repayment burden is expected to decrease from 940,000 won to 340,000 won, reducing the burden by up to 600,000 won.

Next month, a separate installment repayment guarantee support program will be launched for business owners who have closed their businesses and hold existing loans guaranteed by regional credit guarantee foundations. This program will provide up to 15 years of installment repayment and low-interest loans. The installment repayment period, previously limited to seven years, will be extended to a maximum of 15 years, and the burden will be further reduced through low-interest loans.

Additional benefits will also be provided to faithful repayers, including an expansion of preferential interest rates for new loans (from 0.1 percentage point to 0.3 percentage point), an increase in the number of loan applications (from three to four times in five years), and the opportunity to apply for up to 200 million won in Innovation Growth Promotion Funds.

Support will also be provided for small business owners whose management becomes unstable after receiving policy funds. For those at risk of delinquency, one-on-one consulting with experts will be arranged. If business closure or industry transition is necessary, comprehensive support will be offered, including tax and labor consulting, store demolition costs, and re-entrepreneurship education. In addition, since July 14, the range of uses for the burden reduction credit has been expanded to include telecommunications fees and vehicle fuel costs, both of which are considered public utility expenses.

Han Sung-sook, Minister of SMEs and Startups, plans to hold roundtables every week to listen to the voices of small business owners in the field. "Recovery and safety net building for small business owners" has been the minister's top policy priority since her candidacy. During the roundtable, suggestions were made regarding small business insurance policies, and the government responded that it would actively review these suggestions and promptly implement feasible measures.

Minister Han stated, "This is precisely the purpose of holding these roundtables," adding, "The government should not unilaterally present policies, but rather develop them through a process of exchanging opinions among small business owners, private experts, and relevant ministries." She continued, "Disaster insurance from the Ministry of the Interior and Safety and the National Employment Support System from the Ministry of Employment and Labor are closely related to small business owners, so all ministries should work together to promote these systems."

She concluded, "The vicious cycle of crises surrounding small business owners must be broken once and for all," and emphasized, "We will ensure that policies become practical solutions that go beyond reports and are truly effective in reality."