The banking sector is supporting self-employed borrowers who have either closed or plan to close their businesses by allowing them to repay their debts over a period of up to 30 years. This support includes a grace period of two years, regardless of the type of loan, to ease the burden of principal repayment.
On February 24, the Korea Federation of Banks announced that it will expand the support to include already closed businesses, allowing small business owners preparing for closure to repay their remaining loans gradually. During the process of refinancing, if the borrower’s business is not closed, or if only part of multiple business locations have closed, or if the borrower is undergoing debt restructuring, they are excluded from this program to prevent misuse.
For credit loans, if the remaining balance exceeds 100 million KRW, borrowers can repay over a maximum of 10 years, while balances of 100 million KRW or less can be repaid over up to 30 years. For guaranteed loans, balances exceeding 100 million KRW can be repaid over a maximum of 5 years, and balances of 100 million KRW or less over a maximum of 7 years.
The interest rates for long-term installment loans for amounts up to 100 million KRW will be the 5-year standard rate of each bank plus an additional 0.1 percentage points. For secured loans, household mortgage loan interest rates will be applied regardless of the remaining balance, with repayment periods ranging from 10 to 30 years. Prepayment fees due to refinancing will be waived. If a new business loan is taken while receiving support under this program, the support will be suspended.
The banking sector will cooperate with other government support programs to provide comprehensive support. This includes aligning with government programs like the Small Business Specialized Employment Support Program and Hope Return Package to provide quick assistance even in the early stages of closure.
Small business owners can inquire about program details at their bank branches. Those wishing to use the program immediately can also make a reservation to apply for the program, where they will receive information on the program’s launch and when they can visit the bank.
The long-term repayment support program for business closures will be implemented in April after revisions to the banking sector’s guidelines and necessary system adjustments. Additionally, tailored debt adjustments, the Sunshine Loan 119, and banking sector consultations will begin in April with procedures being coordinated with financial authorities and related institutions.