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Maturity for Covid loans for small businesses to be postponed

Maturity for Covid loans for small businesses to be postponed

Posted September. 21, 2022 07:59,   

Updated September. 21, 2022 07:59


The financial support under the Covid-19 pandemic for small-sized business owners and small-and medium-sized enterprises (SMEs) will likely be extended for another round. Discussions are underway to extend loan maturity to three years and postpone repayment of principal and interest by one year.

According to the pundits of financial circles, the Financial Services Commission (FSC) has effectively decided to extend the maturity again and postpone the repayment of loan principal and interest for small-sized business owners and SMEs, which was to be exterminated late this month. The latest move by the FSC appears to be largely affected by the call from President Yoon Suk-yeol and lawmakers to come up with financial measures to alleviate the debt burdens on small businesses against the backdrops of surging inflation and interest rates.

A detailed approach is currently being discussed between the authorities, extending the maturity of loans by three years and postponing the repayment of debt and interest by one year to prevent massive loan failure. This approach will allow debtors to choose from maturity extension, repayment postponement, or debt restructuring, depending on their financial leeway. For debt restructuring, the 30-trillion-won New Start Fund will be launched next month, and other support programs will be tapped into.

The debt extension and postponement programs have been in place since April 2020 to support small-sized business owners afflicted by the Covid-19 pandemic, and they have been extended four times every six months. If the programs are extended again, it will mark the fifth. As of late January, extended and delayed debt currently stands at around 133.3 trillion won for 704,000 cases. The FSC plans to confirm‎ the extension as soon as early next week after consulting with relevant ministries in charge and financial circles.

Do-Hyong Kim dodo@donga.com