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| A restaurant owner in Seoul prepares for work, Jan. 12. Korea Times file |
By Yi Whan-woo
The amount of bank loans taken out by self-employed people is estimated to have surpassed 1,000 trillion won ($757.9 billion) for the second consecutive quarter amid lingering risks of default, according to data disclosed Monday.
Released by main opposition Democratic Party of Korea (DPK) Rep. Yang Kyung-sook, the data compiled by the Bank of Korea (BOK) showed the total amount of money borrowed by self-employed people was 1,019.8 trillion won as of the fourth quarter of 2022.
The amount increased from 1,014.2 trillion won in the previous quarter when it surpassed the 1,000 trillion mark for the first time.
Of the 1,019.8 trillion won worth of loans offered during the final three months of 2022, business loans amounted to 671.7 trillion won, which was almost twice the size of personal loans.
The data showed 56.4 percent of the total number of borrowers took out loans from at least three lenders.
The money they borrowed accounted for 70.6 percent of the 1,019.8 trillion won.
"Nearly six out of 10 borrowers have borrowed money from multiple institutions, meaning they will have a higher chance of denial if seeking to take out additional loans," an industry source said.
The source noted many self-employed people are among the heavily indebted borrowers who struggle with repayments following the steep rate hikes delivered by the BOK over the past year and therefore they face a possible risk of default when the government's pandemic relief program is over.
The program has allowed small business owners and the self-employed to delay loan payments since 2020 due to pandemic restrictions cutting into their ability to make money.
The data showed the amount of interest to be paid by each self-employed borrower will go up by 760,000 won for every 0.25-percentage-point increase in the base rate and 4.54 million won for every 1.50 percentage point hike in the base rate.
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