[2025 Audit] Worker Sunshine Loan Applications Surge Amid Economic Downturn This Year

More Borrowers Rely on Subrogation for Principal Repayment
Min Byungdeok Urges Swift and Comprehensive Policy Response

The number of applications for the "Worker Sunshine Loan," a policy loan product used by low-income employees with poor credit, has been rapidly increasing this year. This trend is analyzed to be a result of sluggish domestic demand and the prolonged economic downturn.

According to data submitted by the Korea Inclusive Finance Agency and analyzed by Min Byungdeok, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, the number of Worker Sunshine Loan applications reached 245,188 as of the end of August this year. It is projected to reach around 370,000 by the end of the year.

The Worker Sunshine Loan is a policy finance product supported by funds from the lottery fund and contributions from financial companies, targeting workers with low credit scores. It is supplied by various financial sectors, including savings banks, mutual finance, and insurance companies.

Employees who have worked for more than three months within the past year and have an annual income of 35 million won or less can apply regardless of their personal credit score. Those with an annual income of up to 45 million won can apply if their personal credit score falls within the bottom 20% (as of last year, KCB 700 points or below, NICE 749 points or below).

Min Byungdeok, Member of the Democratic Party of Korea. Office of Min Byungdeok

Over the past five years, the number of Worker Sunshine Loan applications was 337,797 in 2021, 313,044 in 2022, and 346,038 in 2023. Last year, the figure remained high at 340,660, and the upward trend is expected to continue this year.

The total loan amount was 3.4597 trillion won in 2021, 3.8285 trillion won in 2022, 3.4342 trillion won in 2023, and 2.8087 trillion won last year. As of the end of August this year, it has already reached 2.335 trillion won, making it highly likely to surpass last year’s total.

Growth in the insurance sector is particularly notable. The Worker Sunshine Loan for insurance companies was introduced in December 2022, with 169 cases in its first year, increasing to 214 last year. As of the end of August this year, it has already reached 319 cases, surpassing last year's total.

The interest rate burden also remains significant. The average interest rate for Worker Sunshine Loans rose from 7.6% in 2021 to 10.0% in 2023, then fell to 9.2% in 2024, and currently stands at 7.8% as of August this year.

Along with the expansion in demand for Worker Sunshine Loans, the subrogation rate (the rate at which the Korea Inclusive Finance Agency repays the principal on behalf of borrowers) has also been steadily rising. According to the agency, the overall subrogation rate increased from 10.6% in 2021 to 12.7% last year, and as of the end of August this year, it stands at 12.5%. In particular, the subrogation rate for savings banks rose from 11.6% in 2021 to the mid-13% range this year, driving the overall increase.

Min Byungdeok pointed out, "Although the interest rate for Worker Sunshine Loans has recently declined slightly, a 7-9% interest rate still poses a significant repayment burden for low-income individuals." He emphasized, "In order for the Worker Sunshine Loan to continue serving as a safety net for inclusive finance, the government must promptly prepare proactive and comprehensive measures, including reducing interest rate burdens, expanding funding, and strengthening risk management."

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