Self-employed individuals are feeling the heat of the rising loan interest rates. With an increase of only 0.25%, their annual interest payments have already ballooned by a staggering KRW 760,000 (USD 577.10). Since the second half of 2021, this figure has skyrocketed by 3%, adding up to more than KRW 9 million (USD 6,834.02) in additional financial burden annually! To make matters worse, personal business loan delinquencies have also increased to 0.24%, a jump of 0.07% from the previous quarter – a warning sign that debt is becoming harder and harder to manage for many people in South Korea.
The COVID-19 pandemic has been a harsh burden to small businesses, especially for self-employeed individuals, leaving them with crippling high interest rates on their loans. An owner was forced to take out loans to cover her expenses, and the debt has risen steeply to KRW 280 million (USD 212,661.04). Not only is the interest rate rising every three months from 3% to 6%, but she’s also accumulated multiple debts of three or more loans with an average amount of KRW 420 million (USD 318,921.16) per person. The plight of this business owner is not unique; many self-employed individuals are in similar financial distress.
With inflation rates still at a high, self-employed individuals have been feeling the pinch as they strive to keep their businesses afloat. It is a difficult time for these hardworking entrepreneurs, who have had to shoulder the responsibility of caring for themselves and their business in the face of this global crisis. Despite all the obstacles they face, it is essential that we provide them with financial support and resources that can help them sustain their operations in this difficult period.