COVID-19 and Interest Rate Hikes Double Whammy, Personal Business Loans Reach 665 Trillion Won... 38.0% Increase in 3 Years

3.14 Million Individual Business Loan Borrowers... 33% Increase in 2 Years
'Multiple Debtors' Borrowing from 3 or More Financial Institutions Up 60% Since 2019
Jin Sun-mi "Government-Level Financial Support Policy Needed"

[Asia Economy Reporter Oh Ju-yeon] Due to the impact of COVID-19 and other factors, loans to individual business operators have increased by 38.0% over the past three years, reaching 665 trillion won. The number of multiple debtors has also risen sharply, raising concerns about the delinquency of loans to individual business operators.

According to the 'Status of Corporate Loans to Individual Business Operators' data submitted by the Financial Supervisory Service to Jin Sun-mi, a member of the Democratic Party of Korea, as of the end of March this year, the total amount of loans to individual business operators reached 664.9529 trillion won, with 3,144,163 borrowers.

The door of a closed store in Myeongdong, Seoul is firmly locked. The padlock is rusted, showing how much time has passed. We hope the COVID-19 situation settles soon so that small business owners and self-employed people can smile brightly again. / Photo by Moon Honam munonam@

At the end of December last year, the total amount of loans to individual business operators was 637.4784 trillion won, a 14.5% increase compared to the previous year (556.8639 trillion won), and the number of borrowers was 2,790,010, a 9.6% increase compared to the previous year (2,545,946).

Loans to individual business operators have shown a sharp increase since 2020, when the COVID-19 virus began to spread in earnest.

Compared to the end of December 2019, the total amount of loans to individual business operators at the end of December 2021 increased by 32.4% (481.622 trillion won → 637.4784 trillion won), and the number of borrowers increased by 33% (2,097,221 → 2,790,010).

The increasing trend of individual business operators continues into this year. Jin Sun-mi’s office analyzed, "The rapid increase in loans to individual business operators is likely influenced by the expanded demand for business funds due to COVID-19 and the balloon effect of household loan regulations."

Along with this, multiple debts in corporate loans are also increasing rapidly. Multiple debtors refer to people who have borrowed money from three or more financial institutions. Many multiple debtors engage in "rolling over debt with more debt," and the recent sharp rise in interest rates increases their repayment burden, which can lead to a rise in delinquency rates, requiring special management.

As of the end of March this year, the number of multiple debtors holding corporate loans from three or more institutions among individual business operators was 382,235, and the amount they borrowed reached 183.1325 trillion won. Compared to the end of December last year, the number of borrowers increased by 33.3%, and the total amount increased by 12.7%.

Multiple debts in loans to individual business operators also surged from 2020, when COVID-19 spread.

At the end of December last year, the number of multiple debtors with corporate loans among individual business operators was 286,839, a 118.9% increase compared to the same period in 2019 (131,053). The total amount reached 162.4312 trillion won, a 60% increase compared to the same period in 2019 (101.5309 trillion won).

Representative Jin said, "As the scale of loans to individual business operators has greatly increased during the COVID-19 pandemic, combined with the rise in interest rates, the debt burden on self-employed individuals has grown," and emphasized, "Government-level financial support policies for the self-employed must be actively implemented."

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