Last Year, SME Policy Loan Default Amounted to 518.8 Billion Won... "Rapid Increase in Specific Areas, Inspection Needed"

[Asia Economy Reporter Kim Daeseop] Amid the global economic downturn and domestic economic recession, small and medium-sized enterprises (SMEs) are facing difficulties in managing funds, and last year, the default amount on 'SME policy loans' exceeded 500 billion KRW for the first time in history.

On the 23rd, according to the 'Status of Policy Loan Disbursement and Default Amounts' submitted by the Small and Medium Business Corporation to National Assembly member Kwak Daehoon (Liberty Korea Party), the default amount on policy loans in 2019 was investigated to be 518.8 billion KRW. This is an increase of 143.1 billion KRW (38%) compared to 375.7 billion KRW in 2016.

By region, the areas with the largest increase in default amounts from 2016 to 2019 were Gyeongsangnam-do (32.5 billion KRW), Gyeongsangbuk-do (20.9 billion KRW), and Busan Metropolitan City (17 billion KRW), in that order. In terms of growth rate, Ulsan Metropolitan City (173%) and Gyeongsangnam-do (95%) ranked highest.

On the other hand, Jeollanam-do (△8.8 billion KRW) and Chungcheongbuk-do (△4.5 billion KRW) saw a decrease in default amounts compared to 2016, and the regions with the lowest increase rates were Jeollanam-do (△42%), Chungcheongbuk-do (△20%), and Gwangju Metropolitan City (9%).

Member Kwak analyzed that the reason for the increase in policy loan default amounts is due to the economic recession causing disrupted cash flow for SMEs. Although SMEs receive support for facilities or operating funds to provide goods or services and must repay interest and principal with profits, continuous domestic demand recession and export decline have reduced profits, ultimately leading to long-term delinquency and business closures.

The annual loan amounts from the Small and Medium Business Corporation were recorded as 4.5512 trillion KRW in 2016, 4.6661 trillion KRW in 2017, 4.415 trillion KRW in 2018, and 4.358 trillion KRW in 2019.

Member Kwak stated, "Since default amounts are rapidly increasing in specific regions, it is necessary to review whether SME support policies are being implemented in a balanced manner nationwide."

This content was produced with the assistance of AI translation services.