Small Finance Self-Employed Interest Cashback Launch... Applications Open from the 18th

by Yoo Jaehoon

Published 10 Mar.2024 12:01(KST)

The interest refund (cashback) procedure for self-employed individuals who received high-interest loans from small and medium financial institutions is set to begin.

The Financial Services Commission announced on the 10th that starting from the 18th, it will accept interest support applications from borrowers who took out business loans from savings banks, mutual finance institutions (agriculture, fisheries, credit cooperatives, forestry cooperatives, Saemaeul Geumgo), and specialized credit finance companies (card and capital companies).

On the 26th, when the 'Stress DSR,' which precisely reflects future interest rate fluctuation risks in the Debt Service Ratio (DSR), was implemented, a real estate mortgage loan interest rate chart was posted on the exterior wall of a branch of a commercial bank in Seoul. The Stress DSR system is a measure that applies an additional interest rate (stress interest rate) when calculating the DSR, considering the possibility that borrowers using variable interest rate loans may face increased principal and interest repayment burdens due to rising interest rates during the loan period. The stress interest rate applied until the first half of this year is 0.38%. Photo by Kang Jin-hyung aymsdream@

The eligible applicants for this interest cashback are individual business owners or small corporate businesses (excluding real estate rental, development, supply businesses, and financial industries) who, as of December 31 last year, received business loans from small and medium financial institutions with interest rates between 5% and less than 7%. Borrowers who have paid interest for more than one year will receive a one-time payment for one year's worth of interest. The maximum loan amount eligible for support is 100 million KRW, and the maximum amount receivable per person is 1.5 million KRW.

The interest refund from small and medium financial institutions will be paid at the end of each quarter (March 29, June 28, September 30, December 31). Borrowers who have paid interest for more than one year as of the quarter-end date will receive a one-time payment for one year's worth of interest. For example, borrowers whose loan contract period has not exceeded one year before the first refund date (March 29) will be able to receive the refund amount on the upcoming quarter-end date (June 28) after paying one year's interest.

Regarding the detailed schedule, borrowers who have paid interest for more than one year during the first quarter can apply for the refund from the 18th to the 25th, undergo review from the 26th to the 28th, and receive sequential refunds from the 29th to April 5. Borrowers who reach one year of interest payment during the second quarter can apply from April 1 to June 24, undergo review on June 25-26, and receive refunds between June 28 and July 5. Third-quarter applicants can apply from July 1 to September 24, undergo review, and receive refunds between September 30 and October 8. Fourth-quarter applicants can apply from October 1 to December 31 and receive refunds between January 7 and January 14 of the following year.

Application channels for individual business owners include both online (Credit Information Service website) and offline (visiting the financial institution) options. For small corporate businesses, submitting an application to specialized credit finance companies requires contacting call centers or using mail/email. Other institutions should visit their financial institution. Detailed information can be found on the websites of the Financial Services Commission, Ministry of SMEs and Startups, and individual financial institutions.

Before the application period, each financial institution will provide guidance on the easy refund application to eligible borrowers starting from the 13th via website postings or text messages. From the 18th, inquiries can be made to the Small and Medium Business Corporation call center. Before the 18th, inquiries can be directed to the Small and Medium Business Corporation’s business department.

An official from the authorities stated, "It is important to note that the interest cashback from small and medium financial institutions is paid only upon the borrower's application, and although the refund is for the end of the first quarter, borrowers who miss applying in March can apply at any time and receive the refund at the quarter-end date following their application."