Four out of 10 domestic small and medium-size enterprises (40%) said their funding conditions worsened this year compared with last year.
The Korea Federation of Small and Medium Enterprises announced the results of the survey titled "2025 survey on SME finance use and difficulties," conducted from the 9th to the 12th on 500 small and medium-size enterprises.
In the survey, 40% said their funding conditions "worsened" this year, more than three times the 13.2% who said they "improved." As reasons for worsening conditions (multiple responses), "sluggish sales" ranked highest at 59%, followed by "higher raw and subsidiary material prices (51.5%)" and "rising labor costs (33%)."
Regarding the use of external funds this year, 40.4% said "used," and 59.6% said "did not use." As for where funds were used, "payment for purchases" was highest at 70.3%, followed by "payroll (53.5%)" and "repayment of principal and interest on existing loans (30.2%)."
As difficulties in raising funds through banks, "high loan interest rates (73.6%)" were cited most frequently, and as a desired improvement related to bank loans, "lowering loan interest rates (79.6%)" ranked highest.
Asked what financial support SMEs need most, "expanding policies to ease interest burdens" was highest at 38.8%, indicating that despite a cut in the Bank of Korea's base rate, SMEs' financing cost burdens have not been resolved. Beyond easing interest burdens, needed financial support included "expanding policy fund loans (27.4%)" and "improving the practice of relying on collateral loans (14%)."
For overall borrowing conditions next year, 37% responded they will "deteriorate," up 4.4 percentage points from 32.6% in the same survey last year. Regarding the outlook for improving SME financial conditions under the new administration's core financial policy of a "grand shift to productive finance," 51.4% expected conditions will "improve," suggesting expectations that productive finance by the government will improve SMEs' financing environment.
Lee Min-gyeong, executive director for policy at KBIZ, said, "Even though the Bank of Korea's base rate has been cut since Oct. last year, SMEs cited high loan interest rates as the biggest financial difficulty in 2025," adding, "The financial support SMEs need most also turned out to be the expansion of policies to ease interest burdens, showing that financing cost burdens persist."
Lee continued, "As the government is pushing a 'grand shift to productive finance' that redirects financial resources concentrated in real estate and other household loans toward productive areas that can create added value, such as advanced industries, small merchants, and venture companies, the Korea Federation of Small and Medium Enterprises will also continue to develop financial policies to build a growth ladder for small and small merchants based on productive finance."