Extension and Repayment Deferral for Small Business Owners, Financial Services Commission Affirms "No Crisis in September"

Maturity Extension Until September 2025
Repayment Deferral Also Available for 40-50 Months

Support Scale for Maturity Extension and Repayment Deferral Continues to Decrease
100 Trillion Won in September Last Year → 76 Trillion Won in June This Year

The Financial Services Commission firmly stated that there is "no crisis in September" regarding the extension of loan maturities and repayment deferrals for small and medium-sized enterprises (SMEs) and small business owners. On the 30th, Lee Se-hoon, Secretary General of the Financial Services Commission, announced the "Status of the Smooth Landing of Maturity Extension and Repayment Deferral Measures" at the Government Seoul Office.

Since April 2020, during the COVID-19 period, financial authorities and banks have extended loan maturity extensions and repayment deferral measures for SMEs and small business owners in six-month increments. In September last year, the Financial Services Commission announced the 5th extension plan, deciding to apply maturity extensions for three years until September 2025 and repayment deferrals until September this year.

Secretary General Lee explained, "Although the expiration of repayment deferrals is approaching in September, borrowers under repayment deferral had prepared repayment plans with banks by March, and most agreed to repay in installments over 40 to 50 months. Therefore, even by the end of September this year, only a very small portion of these deferred loans will reach maturity, and most will be repaid in installments over the coming years according to the repayment plans, so there is no problem."

The scale and number of beneficiaries of maturity extension and repayment deferral support have been continuously decreasing. At the end of September last year, it was about 100 trillion KRW (430,000 borrowers), but by the end of March this year, it decreased to about 85 trillion KRW (390,000 borrowers). By the end of June, it further decreased to about 76 trillion KRW (350,000 borrowers).

In other words, comparing the end of September last year and the end of June this year, there was a decrease of about 24 trillion KRW (80,000 borrowers). This represents a 24% decrease in loan balance and a 20% decrease in the number of borrowers. Among these, maturity extensions decreased by 19.6 trillion KRW (73,000 borrowers), with most (92%) having completed repayment through normal repayment or refinancing loans.

The outstanding principal repayment deferral balance decreased by 3.3 trillion KRW (12,000 borrowers). Of the decreased loan balance, 51% have started repayment, and 42% have completed repayment. The outstanding interest repayment deferral balance decreased by 1 trillion KRW (1,100 borrowers), with 52% of the decreased loan balance having started repayment and 37% having completed repayment.

Secretary General Lee stated, "Most borrowers under repayment deferral have resumed business, improved their financial situation, and started or completed repayment using refinancing loans with lower interest rates. Some cases involved repayment starting due to support being discontinued because of delinquency or business suspension/closure."

Of the approximately 24 trillion KRW decrease in total supported loan balances, 1.6 trillion KRW was debt restructuring. Among this, 1.55 trillion KRW was financial sector's own debt restructuring, accounting for most (98%). Debt restructuring through the New Start Fund was 15.2 billion KRW, about 1% of total debt restructuring.

Secretary General Lee said, "The Financial Services Commission, in cooperation with the Financial Supervisory Service and financial sector associations, is conducting individual interviews with borrowers under repayment deferral and supplementing repayment plans, while strengthening promotion of financial institutions’ own smooth landing support programs to assist smooth landing. In particular, for about 800 borrowers under interest repayment deferral, meticulous one-on-one borrower management will continue."

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