Meeting Held to Review Soft Landing of Maturity Extensions
for Small Business Owners Affected by COVID-19
Financial Sector Plans to Further Extend Most Maturing Loans
The majority of maturity-extended loans for small and medium-sized enterprises (SMEs) and small business owners affected by COVID-19 will be extended further.
On the morning of September 25, the Financial Services Commission announced that it held a meeting at the Seoul Government Complex to review the status of the "COVID-19 SME and Small Business Maturity Extension and Repayment Deferral Soft Landing" initiative, chaired by the Director General of the Financial Industry Bureau and attended by the Financial Supervisory Service, the Korea Federation of Banks, and major banks.
Since April 2020, the financial sector has implemented maturity extensions and principal and interest repayment deferrals for SMEs and small business owners facing temporary liquidity difficulties due to COVID-19.
The maturity extension and repayment deferral measures were extended four times in six-month increments (for a total of two and a half years). Subsequently, under the "Maturity Extension and Repayment Deferral Soft Landing Support Plan" announced in September 2022, maturity extensions were re-extended until the end of September this year.
At the time of the final extension in September 2022, the outstanding balance of loans subject to maturity extension and repayment deferral in the financial sector was approximately 100 trillion won, with about 434,000 borrowers. As of June this year, due to repayments during the support period, the outstanding balance had decreased to about 44 trillion won, with approximately 210,000 borrowers. Of the maturity-extended loans, those maturing within this month amount to up to 1.7 trillion won.
The government expects that most of these maturity-extended loans are performing loans with no delinquencies, and that the majority will be eligible for further maturity extensions upon maturity, depending on the autonomous loan management procedures of each financial institution.
For loans subject to installment repayment (formerly repayment deferral), it was confirmed that since the end of the repayment deferral measure in September 2023, borrowers have been making regular installment repayments according to the repayment plans submitted to their financial institutions.
Going forward, the financial sector plans to autonomously grant further maturity extensions to most borrowers of maturity-extended loans who have no delinquencies. For borrowers who are unable to receive further extensions due to delinquencies, business suspension, or closure, each financial institution will support their debt relief and recovery through its own support programs or through sector-wide debt adjustment programs (such as the Small Business 119 Plus, New Start Fund, and the Credit Counseling & Recovery Service debt adjustment program).
The Financial Services Commission stated that, together with the Financial Supervisory Service and the financial sector, it will closely monitor the soft landing of existing maturity-extended borrowers. Guarantee institutions (such as the Korea Credit Guarantee Fund and regional credit guarantee foundations) will also consider cooperating by re-extending guarantee periods for guaranteed loan borrowers and providing new guarantees.
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