Extended Repayment Plan for Small Business Owners: Up to 15 Years for Guaranteed Loans

Extended Repayment Plan for Small Business Owners: Up to 15 Years for Guaranteed Loans

The Korean government has announced a special policy to support small business owners who closed their businesses but continued to make repayments faithfully. Under the new measure, the repayment period for guaranteed loans through regional credit guarantee foundations will be extended to a maximum of 15 years. This initiative is designed to reduce financial burdens on small business owners who shut down operations during the COVID-19 pandemic and to provide them with opportunities for a fresh start.

Eligibility and Requirements

The extended repayment support applies to small business owners who operated between April 1, 2020, and the end of June 2023 and have since closed their business. The main requirements include:

- Currently holding a guaranteed loan through a regional credit guarantee foundation
- Demonstrated faithful repayment history
- Business officially closed at the time of application

In other words, this program is aimed at responsible borrowers who, despite closure, continued to repay their loans, ensuring that assistance goes to those most deserving of financial relief.

Repayment Terms and Benefits

Under this special program, existing guaranteed loans will be converted into a new structure with 2 years of grace period and 13 years of installment repayments, making a total of 15 years. This significantly lowers the monthly repayment burden for small business owners.

For loans up to KRW 100 million, a preferential interest rate of 5-year financial bond + 0.1% will be applied. Additionally, the government will cover the full guarantee fee, meaning that borrowers will not need to pay additional fees for the extended repayment plan.

Participating Banks and Application Process

The program will first be rolled out through Kookmin Bank, Nonghyup Bank, and Shinhan Bank starting this month. Other banks will be added gradually between now and October. Applications can be made at local branches of regional credit guarantee foundations. For detailed guidance, applicants can also contact the Korea Credit Guarantee Foundation at the national helpline (1588-7365).

Expected Impact

The biggest beneficiaries of this policy will be small business owners who had to close their businesses due to the pandemic but continued to meet their repayment obligations. With longer repayment periods and reduced costs, these individuals will have more financial stability and a stronger chance to rebuild or restart new businesses. The government expects this initiative to contribute not only to personal recovery but also to revitalization of the broader local economy.

🔎 Key Summary

- Eligible: Small business owners who operated April 2020–June 2023 and later closed
- Condition: Must be currently repaying a guaranteed loan from a regional credit foundation
- Benefits: Repayment extended to 15 years, government covers all guarantee fees, low interest rate applied
- Application: From the 5th at regional credit foundation branches, with Kookmin, Nonghyup, and Shinhan Banks first
- Impact: Reduced repayment burden, support for restart and recovery

FAQ: Extended Repayment for Closed Small Business Owners

1. What was the previous repayment term limit?

Previously, installment repayment terms were limited to a maximum of 7 years. This has now been doubled to 15 years.

2. Who covers the guarantee fee?

The government fully covers the guarantee fee, eliminating this financial burden for small business owners.

3. What interest rate applies to the new loans?

For loans under KRW 100 million, the interest rate will be financial bond (5 years) + 0.1%.

4. Which banks are participating first?

Kookmin Bank, Nonghyup Bank, and Shinhan Bank are the first to participate, with more banks joining in later months.

5. Where can I apply?

Applications can be made at local branches of regional credit guarantee foundations. For further assistance, call the helpline at 1588-7365.

Conclusion: A Lifeline for Struggling Entrepreneurs

The 15-year repayment extension for guaranteed loans is not just about reducing debt—it represents a second chance for small business owners who endured unprecedented hardships during the pandemic. By easing financial burdens and providing stability, the program encourages new beginnings and entrepreneurial recovery. With continued support from the government and financial institutions, closed small businesses can find their footing again and contribute to economic revitalization.

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