'As Fierce as Idol Ticketing' The Bitter Popularity of Small Business Loans

Youth Employment Linked Fund Loan Early Closure on a First-Come, First-Served Basis

In the era of "1000 trillion won" in self-employed loans, government-linked loan products are becoming increasingly popular. It is even said to be "as difficult as idol ticketing."

The Small Enterprise and Market Service (SEMAS) announced on the 3rd that the second quarter application for the "Youth Employment-Linked Fund" proxy loan was closed on a first-come, first-served basis. The Youth Employment-Linked Fund provides eligibility to small business owners who are either △ youth small business owners with less than 3 years in business (39 years old or younger), △ currently employing youth workers who make up 50% or more of all regular employees as of the application date, or △ small business owners who have employed and maintained at least one youth worker within the past year. The loan limit is up to 70 million won per business, with an annual fixed interest rate of 2.0%. The loan period is up to 5 years.

This product accepts applications every quarter. The application period this time was from the 3rd to June 30th. However, the budget was exhausted immediately after opening at 9 a.m. on the first day of application, resulting in an early closure. In self-employment-related communities, comments such as "It was a 4-second cut," "I stayed up all night and still failed to connect at the exact time," and "It's as difficult as idol ticketing" were made. There were also remarks like "Was the budget allocated just a tiny amount?" SEMAS team leader Jeong Hee-cheol said, "The annual budget for related products is about 100 billion won," adding, "It is popular because it supports loans at a low fixed interest rate in this high-interest era."

Due to fierce competition, many self-employed people cannot even apply and fail to reach the screening stage. The situation was similar during the application for the Small Business and Traditional Market Policy Fund (3rd round) last month. 200 billion won worth of funds was exhausted within about 10 minutes. This product offered loans of up to 30 million won at a fixed annual interest rate of 2% to low-credit small business owners (credit score 744 or below).

This bittersweet popularity is due to the worsening financial situation of the small business sector. Self-employed people, who have reached a level where it is difficult to get loans anymore, are flocking to government-linked products with relatively lower loan thresholds. According to the "Self-Employed Loan Status" submitted by the Bank of Korea to Assemblywoman Yang Kyung-sook of the Democratic Party, as of the end of the fourth quarter last year, the total self-employed loans (business loans + household loans) amounted to 1019.8 trillion won. It exceeded 1000 trillion won for the first time at the end of the year. Among them, 56.4% were "multiple debtors" who had taken out three or more loans.

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