Seoul - A recent report by Korea Credit Data reveals that small business owners in South Korea, particularly those operating cafes and bars, have been severely impacted by the economic downturn and emergency measures implemented in the fourth quarter of last year.
The report, titled "Trends of Small Business Owners in the Fourth Quarter of 2024," estimates that there were a total of 3,622,000 business establishments with outstanding personal business loans as of the end of the fourth quarter. Of these, 86.7% (3,140,000) were still in operation despite their debt burden, while 13.3% (482,000) were forced to close down.
The average delinquency amount for closed businesses was 5.68 million won, and the average outstanding loan balance was 61.85 million won. The total outstanding loan balance for all individual businesses was 716 trillion won, an increase of 0.5% from the previous quarter (712 trillion won) and 2.3% from the same quarter of the previous year (700 trillion won).
The report also found that the average annual sales per small business establishment in 2024 was 178.82 million won, with an average profit of 42.73 million won. However, the situation has been deteriorating, with many businesses struggling to repay their loans due to worsening business conditions.
Cafes were particularly hard hit, with sales in the fourth quarter falling by 9.5% compared to the third quarter and 1.3% compared to the same period last year. Sales of fast food and bars also declined by 1.8% and 1.7%, respectively, compared to the previous quarter.
This report is based on a sample survey of businesses subscribed to Cash Note, a business management service for individual business owners provided by Korea Credit Data, and the overall status of individual businesses was estimated by applying the weights of the Small Business Survey and other data.
The findings of this report highlight the challenges faced by small business owners in South Korea due to the economic slump and emergency measures. The government and financial institutions need to provide support to these businesses to help them overcome these difficulties and ensure the stability of the overall economy.
[Copyright (c) Global Economic Times. All Rights Reserved.]
