Extension of Small Business Loans Goes Hand in Hand with Saechulbal Fund... Up to 3 Years

[Asia Economy Reporter Song Hwajeong] With the expiration of the maturity extension and repayment deferral for small business owners scheduled for the end of this month, the government plans to announce an extension plan next week. This will be the fifth extension, with repayment deferral extended by 1 year and maturity extension expected to be operated in conjunction with the Saechulbal Fund, allowing for a maximum extension of up to 3 years.

According to the financial sector on the 22nd, financial authorities held a briefing session yesterday for the first and second-tier financial institutions to gather opinions regarding the re-extension of maturity extension and repayment deferral measures.

At the meeting, the financial authorities proposed an additional extension of the principal and interest repayment deferral until the end of September next year, and a maturity extension of up to 3 years.

The reason for setting the maturity extension period to 3 years is to operate it in conjunction with the Saechulbal Fund, a debt adjustment program for small business owners. The Saechulbal Fund, which will start accepting debt adjustment applications from October, will initially operate for one year and may be extended up to 3 years depending on factors such as the resurgence of COVID-19, economic conditions, and trends in potential insolvency among self-employed and small business owners. If the Saechulbal Fund ends after one year, the maturity extension will also end; if it is extended to 3 years, the maturity will be extended accordingly. A representative from a commercial bank said, "It seems that the maturity extension and repayment deferral are being operated in conjunction to handle any defaults through the Saechulbal Fund."

Earlier, Kim Juhyun, Chairman of the Financial Services Commission, also hinted at the possibility of re-extending maturity extension and repayment deferral, stating that the Saechulbal Fund would be utilized. After a meeting with small and medium-sized enterprises and small business owners earlier this month, Chairman Kim said, "There is still a possibility of extending the maturity extension and repayment deferral measures for SMEs and small business owners," adding, "Although not yet finalized, we are considering various options including utilizing the Saechulbal Fund."

The financial sector has expressed concerns about the re-extension policy for maturity extension and repayment deferral. Another commercial bank official said, "Given that it has already been extended four times and now the extension period is even longer, it is expected that hidden potential defaults have increased due to unpaid interest over these extensions, and with another extension of over a year, there is concern about how much worse the defaults might become."

The Saechulbal Fund, which will operate in conjunction with the maturity extension, will be launched on the 4th of next month. An online platform is crucial for application and registration, and with the completion of the IT system work, the Saechulbal Fund is expected to start accepting applications smoothly on the 4th. A Financial Services Commission official said, "The IT work for the Saechulbal Fund is almost complete, and applications will begin on the 4th." Small business owners and self-employed individuals who need debt adjustment can check their eligibility through the online platform and apply starting from the 4th of next month.

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