Seoul, South Korea – South Korean banks have unveiled a new financial support program designed to provide tailored assistance to small businesses struggling with debt. Unlike last year's one-time cash rebate program, this initiative focuses on long-term solutions such as debt restructuring and interest rate reductions.
The program, announced jointly by the Korea Banking Association and financial regulators, is set to run for the next three years and offers customized support based on the individual circumstances of each borrower. The target borrowers include existing businesses, those on the verge of closure, and those with the potential to improve their competitiveness.
Key Features of the Program:
Customized Debt Restructuring: The program expands the existing "Individual Business Owner Loan 119" program, offering debt restructuring options to businesses that are not currently in default but may face difficulties in the future. This includes corporate entities, in addition to individual businesses.
Eligibility: To qualify, businesses must meet certain criteria, such as having annual revenue below 2 billion won, total assets below 1 billion won, and total loans below 1 billion won. However, certain industries, like gambling and entertainment, are excluded.
Support Measures: The program offers three types of support: maturity extensions, long-term debt restructuring, and interest rate reductions. The maximum term for debt restructuring is 10 years, and interest rates will be capped at existing levels.
Support for Closing Businesses: For businesses forced to close, the program offers low-interest, long-term debt restructuring options to help them manage their remaining debt.
New Funding for Viable Businesses: Two additional programs, "Hetsalron 119" and "Small Business Growth Up," provide new loans to businesses that have successfully completed the debt restructuring program or have demonstrated a strong potential for growth.
Tailored Approach The new program marks a significant departure from previous support measures, offering a more comprehensive and sustainable approach to addressing the financial challenges faced by small businesses. By providing tailored support and focusing on long-term solutions, the program aims to strengthen the resilience of South Korea's small business sector.
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