Loan Balances for Sole Proprietors Decline,
But Delinquency Rates Continue to Rise for Third Consecutive Year
High Interest Rates and Economic Downturn Drive the Trend
The delinquency rate among self-employed individuals and other sole proprietors reached a record high of 0.98% last year. This was influenced by the continued trend of high interest rates as well as unfavorable economic conditions.
A view of the shopping district near Garosugil in Gangnam-gu, Seoul, last July. Photo by Yonhap News
According to the "2024 Administrative Employment Statistics: Sole Proprietor Debt (Provisional)" released by the National Data Agency on December 22, the average loan amount for sole proprietors last year was 178.92 million won, a decrease of 300,000 won (0.2%) compared to the previous year.
By financial institution, bank loans increased by 0.3%, while non-bank loans decreased by 0.8%. This marks the first time since related statistics began in 2017 that non-bank loans have declined.
The delinquency rate (based on outstanding loan balances) rose by 0.33 percentage points to 0.98%. Both the delinquency rate and the increase in the rate are the highest since data collection began. The delinquency rate has been on an upward trend for three consecutive years since 2022 (0.05 percentage points).
The delinquency rate was higher among those with lower sales. By sales volume, those with less than 30 million won had the highest rate at 2.03%, while those with 1 billion won or more had the lowest at 0.28%.
By business duration, those in operation for 3 to less than 10 years had the highest delinquency rate at 1.31%, while those in business for 10 years or more had the lowest at 0.64%.
The delinquency rate for sole proprietors without employees was 1.00%, higher than that for those with employees, which stood at 0.32%.
Based on outstanding loan balances, those with less than 10 million won had the highest delinquency rate at 2.54%. Those with 200 million to less than 300 million won had the lowest at 0.56%.
By age group, those in their twenties (aged 29 and under) with lower credit scores had the highest delinquency rate at 1.29%. In addition, the loan amount for those in their twenties decreased by 4.6%, marking the largest decline among all age groups.
By industry, the delinquency rate was highest in construction (1.93%), followed by business support and rental services (1.31%), and agriculture, forestry, and fisheries (1.29%).
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