A storefront sits empty after a business shut down in Seoul, Jan. 22. Yonhap
One in 20 self-employed borrowers have fallen behind on loan repayments, as elevated interest rates and tepid consumer spending squeeze small businesses, contributing to a steady rise in delinquencies on individual business loans since the COVID-19 pandemic.
The figures underscore mounting strain among Korea’s self-employed borrowers, with defaults rising most sharply among those 60 and older — a group expected to turn increasingly to self-employment amid limited retirement security.
Data from NICE Information Service, a credit rating agency, submitted to Rep. Park Sung-hoon of the main opposition People Power Party showed Wednesday that around 166,500 business loan borrowers were more than three months overdue as of last year, categorizing them as delinquent.
The figure accounted for 5 percent of the roughly 3.3 million individual business loan borrowers.The number of delinquent borrowers among the self-employed has tripled over the past five years, rising from 51,000 in 2020 to about 155,000 in 2024.
The share of delinquent borrowers also rose from 2 percent in 2020 to 5 percent last year, indicating that many who borrowed during the ultralow rate period have struggled to repay their loans as rates rose after the pandemic.
The Bank of Korea (BOK) began cutting its benchmark rate in October 2024 but kept it unchanged for much of the second half of last year. The rate now stands at 2.50 percent, up from the 0.50-1 percent range between 2020 and 2021.
The number of delinquent borrowers surged among those ages 60 and older, climbing from about 7,200 in 2020 to about 38,200 last year — the fastest rise among all age groups.
Over the same period, the amount borrowed by the group jumped nearly fivefold, from 2.1 trillion won ($1.4 billion) to around 9.7 trillion won.
A kitchenware shop is seen closed after going out of business in Jung District, central Seoul, Feb. 3, 2025. Newsis
Source: Korea Times News
