The amount of bad debt in direct loans under the Small Enterprise and Market Service's (SEMAS) policy funds for small business owners hit a record high of 1.0127 trillion won last year.
SEMAS operates a policy loan program to support small business owners in maintaining their livelihoods and, further, in growing. However, as the amount of bad debt continues to increase, critics say a more substantive policy is needed.
SEMAS direct loans are policy funds that SEMAS itself reviews and disburses to small business owners, rather than proxy loans through banks and other financial institutions.
According to data received by People Power Party lawmaker Park Sang-ung of the Trade. Industry Energy. SMEs. and Startups Committee from SEMAS on the 23rd, the amount of bad debt in SEMAS direct loans for small business owners reached 1.0127 trillion won in 2024. It is the largest amount since the small business policy funds began in 2015. Compared with 2022 (219.5 billion won), two years earlier, it nearly quintupled. The amount of bad debt in 2023 was 824 billion won.
The sharp increase in the amount of bad debt is seen as largely due to loans to small business owners extended after COVID-19. As of September this year, the cumulative balance of direct loans to small business owners stood at 12.773 trillion won.
In addition, of last year's bad debt in SEMAS direct loans to small business owners, the amount of debt adjustment came to 644.9 billion won (64%). The amount of debt adjustment refers to sums that are difficult to repay because small business owners have entered public debt adjustment such as rehabilitation and bankruptcy. The amount of debt adjustment has been steadily increasing since 2022. It was 80.4 billion won (37%) in 2022 and 444.7 billion won (54%) in 2023.
Lawmaker Park Sang-ung said, "Because the Small Enterprise and Market Service's policy funds are operated with the public's precious taxes, if bad debts accumulate and a state of non-repayment persists for a long time, the sustainability of policies supporting small business owners itself could be shaken," adding, "The fact that the amount of bad debt has surpassed 1 trillion won is proof that our economic conditions are deteriorating that much." Park also emphasized, "It is urgent to prepare effective and substantive policies so that tax money is not leaked due to intentional debt delinquency."