The government plans to proceed with debt forgiveness for 5.4 trillion won in claims under 100 million won that have been in arrears for three years or more among self-employed people who took out loans during the COVID-19 period.
According to the financial industry on the 10th, the Financial Services Commission is said to have reported to the National Assembly a plan regarding a special debt adjustment program for long-term arrears claims of small business owners harmed by COVID-19, for which a 500 billion won budget is allocated next year.
The financial authorities set the target of this special debt adjustment as claims under 100 million won. The Financial Services Commission estimates the total purchase size at 5.4 trillion won, combining 5.1 trillion won held by sole proprietors and 300 billion won held by corporations and others.
The principal reduction rate for this special debt adjustment is reportedly set at a minimum of 80% or more. It appears they judged it necessary to raise the level of principal reduction compared with the New Start Fund, an existing small-business debt adjustment program.
Currently, the New Start Fund reduces principal by up to 80% depending on the debtor's repayment capacity, and provides reductions of up to 90% for basic livelihood security recipients and vulnerable borrowers.