Extension of Support Funds and Guarantee Deadlines to End of September During COVID-19 Spread

Existing Maturity Extension and Repayment Deferral Measures Scheduled Until the End of March Extended by 6 Months

On the 23rd, when the number of new COVID-19 cases approached 500,000, citizens are undergoing diagnostic tests at a temporary COVID-19 screening clinic set up at Seoul Station Plaza. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Kwon Chil-seung, hereinafter referred to as the Ministry) and policy financial institutions under the Ministry announced on the 24th that they have decided to extend the maturity extension and repayment deferral measures, originally scheduled to end at the end of March this year, for an additional six months until the end of September, and to provide the same support for new loans and guarantees issued after April 2020 as the existing maturity extension and repayment deferral measures.

The existing maturity extension and repayment deferral measures supported loans and guarantees issued before March 2020, and new loans and guarantees issued after April were selectively supported for maturity extension through voluntary screening by policy financial institutions and commercial banks. New loans and guarantees massively supported by policy financial institutions since April 2020, the initial spread of COVID-19, are now reaching the end of their grace periods and beginning principal repayments. Given the ongoing management difficulties faced by small business owners and SMEs due to the spread of Omicron and other factors, and the expected significant increase in repayment burdens for small business owners and SMEs whose principal repayments will begin in earnest from April, the Ministry explained that new loans and guarantees issued after April 2020 will also be included in the maturity extension support target and supported accordingly.

In addition, for commercial bank guaranteed loans with installment repayment methods, support was provided by extending the grace period without changing the maturity date, but the maturity date will also be extended in proportion to the extended grace period to guarantee the installment repayment period.

Loans and guarantees from the Small Enterprise and Market Service, the Korea SMEs and Startups Agency, the Korea Technology Finance Corporation, and regional credit guarantee foundations, whose principal repayments are due from April to the end of September this year, are estimated to total 60 trillion KRW, of which 31 trillion KRW (51.6%) are loans and guarantees issued before March 2020, and 29 trillion KRW (48.4%) are those issued after April. Small business owners and SMEs affected by the spread of COVID-19 can receive maturity extension and repayment deferral support for up to 12 months for loans and guarantees with principal repayments due from April to the end of September, provided there is no delinquency in principal and interest, capital erosion, or business closure. In the case of variable interest rates, loan interest rates by banks may vary slightly due to the maturity extension.

Detailed information on support criteria, eligible targets, application procedures, and other matters related to maturity extension and repayment deferral can be found on the websites of each policy financial institution starting from the 28th.

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