issue-briefing
Government to Clear KRW 2.2 Trillion in Small Business Guaranteed Debt, Reopening Paths to Recovery Blocked by Arrears
On June 19, the South Korean government announced a comprehensive overhaul of the small business guarantee system through the 'Establishment Plan for a Sustainable Guarantee Support System' during a meeting of the Emergency Economic Headquarters. Over the five-year period from 2026 to 2030, the government will clear KRW 2.2 trillion in distressed guarantee assets through write-offs and debt adjustments, affecting an estimated 130,000 businesses. The plan reopens guarantee channels previously blocked by arrears and closures by permitting new guarantees for written-off businesses with cleared public records and for bankruptcy-exempt individuals who undergo rapid write-offs. To enhance the soundness of guarantee institutions, the government will prohibit full guarantees in principle, lowering the average guarantee rate from 94.3% to 90% by the end of 2027 and the re-guarantee rate from 50% to 30%. Additional goals include relaxing the guarantee limit to KRW 800 million for growth-oriented small businesses, introducing intellectual property (IP) guarantees, supplying KRW 2 trillion in region-specific guarantees by 2030, and reducing the subrogation rate from 5.07% at the end of 2025 to 3.2% by 2030.
On June 19, the South Korean government announced a comprehensive overhaul of the small business guarantee system through the 'Establishment Plan for a Sustainable Guarantee Support System' during a meeting of the Emergency Economic Headquarters. Over the five-year period from 2026 to 2030, the government will clear KRW 2.2 trillion in distressed guarantee assets through write-offs and debt adjustments, affecting an estimated 130,000 businesses. The plan reopens guarantee channels previously blocked by arrears and closures by permitting new guarantees for written-off businesses with cleared public records and for bankruptcy-exempt individuals who undergo rapid write-offs. To enhance the soundness of guarantee institutions, the government will prohibit full guarantees in principle, lowering the average guarantee rate from 94.3% to 90% by the end of 2027 and the re-guarantee rate from 50% to 30%. Additional goals include relaxing the guarantee limit to KRW 800 million for growth-oriented small businesses, introducing intellectual property (IP) guarantees, supplying KRW 2 trillion in region-specific guarantees by 2030, and reducing the subrogation rate from 5.07% at the end of 2025 to 3.2% by 2030.
Government to Clear KRW 2.2 Trillion in Small Business Guaranteed Debt, Reopening Paths to Recovery Blocked by Arrears 'Establishment Plan for a Sustainable Guarantee Support System' Announced on June 19… Clearing Approx. 130,000 Businesses via Distressed Asset Write-offs and Debt Adjustments, Permitting New Guarantees for Small Businesses with Cleared Public Records and Bankruptcy Exemptions Government Announces Comprehensive Overhaul Plan for Small Business Guarantee System The South Korean government has unveiled a comprehensive package of measures to clear distressed small business guarantees that surged rapidly during the COVID-19 pandemic, while reopening guarantee channels for small businesses whose recovery has been stalled by debt burdens. During the Emergency Economic Headquarters meeting and Economic Ministers' Meeting presided over by Deputy Prime Minister and Minister of Eco…
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