EXTENSION OF SMALL BUSINESS LOANS

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The deadline for paying off small business loans will likely be extended by six months due to business losses sustained during the pandemic. A detailed plan will be announced before Chuseok. Critics say just extending loan maturity without offering viable alternatives is not a fundamental solution to the problem.

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The business curfew in areas where Level 4 restrictions are in place has been extended to close an hour later at 10 p.m. But, the measure has done little to appease small business owners. They plan to stage another car rally on Wednesday because closing their business an hour later doesn’t make much difference in terms of profit.

[Soundbite] Lee Jae-in(Small Business Emergency Committee) : "The current restrictions have zero effect, but they are being extended again and again. They’ve been extended by another month. It’s tantamount to a death sentence for us."

Small businesses that have loans to pay back are especially struggling to make ends meet. The government and the ruling party are considering extending maturity for small business loans by another six months. The initial deadline is late September. The ruling party says it’s discussing loan maturity extension and interest deferral, and that a detailed plan will be announced before Chuseok. But with the key interest rate likely to be raised again, small business debts could snowball if no viable alternatives are provided. As of late July, the amount of near-maturity loans surpassed 209 trillion won, while the amount of deferred principal and interest reached 11 trillion won. That’s about three times the amount recorded a year ago.

[Soundbite] Hong Nam-ki(Finance Minister(Sept. 7th, National Assembly)) : "We are deliberating on various measures to help small businesses receive policy financing and repay their loans. They are facing more pressure as interest rates keep rising. Stronger measures are needed to help them."

Financial authorities will discuss the plan with business leaders this week before announcing detailed measures next week.