[2025 National Audit] Supply Ratio of Financial Products for Low-Income Workers and Youth Declines Over Past Three Years

Sunshine Loan Youth Supply Ratio Drops from 80-90% Range to 60% Range
Kim Namgeun: "Yoon Sukyeol Administration Neglects Demand for Inclusive Finance"

The supply performance of financial products for low-income individuals has declined over the past three years.

According to data submitted by Kim Namgeun, a member of the National Assembly’s Political Affairs Committee from the Democratic Party of Korea, on October 20, the number of applications for Workers’ Sunshine Loan increased by about 42%, from 314,000 in 2019 to 446,000 last year. However, the number of loans actually supplied during the same period only rose by 18%, from 292,000 to 346,000. The supply-to-application ratio dropped from 93.2% to 76.2%, a decrease of 17 percentage points. The total supply amount also fell from 3.8 trillion won in 2022 to 2.8 trillion won in 2024. Kim explained that this indicates a paradoxical reduction in financial support for low-income individuals during the economic downturn.

The supply ratio for Sunshine Loan Youth, a product targeting young people, also declined significantly. While the supply-to-application ratio was 81.5% in the program’s first year in 2020 and nearly 90% in 2022, it dropped to 73% in 2023 as the number of applications increased but the supply amount decreased. Last year, it fell further to 66.4%.

Kim Namgeun, a member of the Democratic Party of Korea, is being interviewed by Asia Economy in his office at the National Assembly Members' Office Building. Photo by Yoon Dongju

In response, the Korea Inclusive Finance Agency explained that the reduction in the supply of Workers’ Sunshine Loan was due to the introduction of other policy financial products such as Sunshine Loan Bank and Sunshine Loan 15, as well as the activation of loan comparison platforms, which have expanded users’ choices. Regarding Sunshine Loan Youth, the agency stated that although the interest rate was maintained at 3.5% since its launch in 2020, banks became reluctant to offer loans in the fourth quarter of last year when the cost of funds exceeded the lending rate due to strengthened household debt management, resulting in negative interest margins.

The agency added, “In order to resolve the complexity of policy-based financial products for low-income individuals-which has caused public confusion and inconvenience-we are currently working to integrate and streamline the system from next year into two types: Sunshine Loan General Guarantee, supplied with private funds, and Sunshine Loan Special Guarantee, supplied with government funds.”

Workers’ Sunshine Loan is a guaranteed loan product for low-income and low-credit workers who face difficulties accessing institutional finance. Sunshine Loan Youth is a policy-based financial product designed to support young people entering society, helping them avoid financial difficulties during their studies, job preparation, or start-up activities.

Kim Namgeun stated, “Sunshine Loan is the last financial ladder for working-class and young people who find it difficult to access institutional finance. The sharp decline in the supply ratio over the three years of the Yoon Sukyeol administration is the result of a policy stance that has sidelined financial support for low-income individuals.” He added, “Since the Korea Inclusive Finance Agency has announced its plan to integrate and streamline the excessively diversified financial products for low-income individuals, I hope this will be implemented quickly to improve the accessibility and effectiveness of policy-based financial support for low-income groups.”

He further emphasized, “In particular, as a measure to secure resources for lowering guarantee fees, there must be a significant increase in banks’ contribution rates. It is necessary to consider factors that can encourage banks to cooperate actively.”