Financial Sector "Operating Supplementary Measures for Smooth Landing of COVID-19 Loans"

[Asia Economy Reporter Kiho Sung] Financial sector associations announced on the 15th that they are operating a soft landing plan for small and medium-sized enterprises (SMEs) and small business owners affected by COVID-19 who are currently under maturity extension and repayment deferral.

The Korea Federation of Banks, Life Insurance Association, General Insurance Association, Korea Federation of Savings Banks, and Credit Finance Association have been supporting loan principal repayment maturity extensions and interest repayment deferrals for SMEs and small business owners experiencing temporary liquidity difficulties due to COVID-19 since April 1. Along with this, a soft landing plan for deferred repayment loans has been prepared to prevent borrowers from facing a sudden repayment burden after the deferral period ends.

When applying for repayment deferral, if the borrower wishes, financial companies adjust the repayment schedule to allow deferred interest or principal and interest to be repaid in long-term and installment payments after the deferral period ends, according to the 'Five Principles of Soft Landing Support.' Additionally, some financial institutions (Shinhan, Woori, Hana, Kookmin, Industrial Bank of Korea, Nonghyup Bank) have proactively provided consulting for new applications to support the establishment of long-term and installment repayment plans tailored to each borrower.

Furthermore, each association has decided to strengthen the current soft landing plan so that borrowers can repay their debts stably within their repayment capacity.

To minimize the borrower's burden when repayment begins, a sufficient grace period (up to one year) will be granted, and the repayment period will be extended to a long-term basis (from 3 years to 5 years).

Through prior consulting and other means, borrowers who appear to have difficulties in repayment will be guided to various support programs from financial sectors and policy financial institutions.

Also, borrowers can receive support according to their individual situations from ▲financial sector’s own debt adjustment systems ▲Debt Adjustment Programs of the Credit Counseling & Recovery Service ▲support programs from policy financial institutions (Korea Development Bank, Industrial Bank of Korea, Korea Credit Guarantee Fund), among others.

Inquiries arising during the application process for maturity extension, repayment deferral, and soft landing plans can be submitted to the Financial Supervisory Service’s 'COVID-19 Financial Support Special Counseling Center' and financial sector support centers.

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