Insolvent self-employed increased by more than 10,000

The number of 'insolvent self-employed' who have been unable to repay loans taken out from the financial sector for more than three months has surged by more than 10,000 this year. The loan maturity extension and the moratorium on principal and interest repayment for self-employed individuals and small businesses, implemented during the COVID-19 pandemic, ended in late September last year, unleashing the accumulated burden of high inflation, high interest rates, and the subsequent economic downturn.

According to data received on Monday from the NICE Information Service by the office of Representative Kim Sung-joo of the Democratic Party of Korea, a member of the National Assembly's National Policy Committee, 72,815 self-employed individuals were unable to repay their loans for more than three months. This marked an increase of 18.4 percent, or 11,341 individuals, from the end of last year, when the number stood at 61,474.

At the end of 2021, per capita debt rose 26 percent, from 142.99 million won to 180.22 million won. However, the average annual interest paid by a single self-employed person increased by nearly 112 percent, from about 4.34 million won to about 9.19 million won, accounting for changes in lending rates due to the Bank of Korea's intense tightening.

Loan delinquency rates are soaring as self-employed individuals face increasing pressure. According to the Financial Supervisory Service, the delinquency rate for loans to self-employed individuals at domestic banks was 0.61 percent at the end of February, triple that of two years ago, which stood at 0.20 percent.


강우석기자 wskang@donga.com