South Korea is preparing a debt-relief program for small businesses that fell into long-term delinquency after taking pandemic-era loans. The government says unsecured claims that have been overdue for about three years or more will be considered for cancellation or restructuring, with detailed rules expected in the fourth quarter.
The broader support package also rewards borrowers who are still repaying. Measures include preferential interest rates, higher lending limits and interest reductions for firms undergoing restructuring. The policy is intended to give distressed owners another chance to return to normal economic activity, but it also creates a policy trade-off: relief for people who cannot recover versus concern that repeated write-downs may appear unfair to borrowers who continued making payments.