The government will start adjusting the debts of small business owners to clear 2.2 trillion won in bad loans from the regional credit guarantee foundation by 2030. Although it is intended to help economically vulnerable small business owners, there are also criticisms that taxes are being invested in debt relief as the government expands guarantee loans in every crisis such as COVID-19.

On the 19th, the government announced the "plan to establish a sustainable guarantee support system" at an emergency economic headquarters meeting and economic ministers' meeting presided over by Deputy Prime Minister and Minister of Finance and Economy Koo Yoon-chul. First of all, 2.2 trillion won worth of non-recoverable bad debts held by local credit agencies will be sorted out by 2030. The government will ease the requirements for incineration, incinerate 1.1 trillion won from local credit agencies, and liquidate bonds by selling 700 billion won and 300 billion won worth of bad loans to the New Start Fund and New Leap Fund, respectively. Bonds that have been transferred to the New Start Fund and New Leap Fund are expected to be subject to up to 90% principal reduction and bond retirement.

Opportunities for small business owners who have failed to pay off their debts will also be expanded. The government plans to allow new guarantees for incineration companies that have been removed from public information registration, and allow bankruptcy exemptions to receive guarantees again through a quick bond burning process. Earlier, the government greatly expanded guarantee loans in the name of preventing small business owners from closing their businesses during the COVID-19 period. The balance of guarantees for local credit security has exceeded 40 trillion won for four consecutive years. The subrogation amount, which was paid off by the local credit agency instead of small business owners, also exceeded 2 trillion won.

[Reporter Seo Jeongwon]