Struggling with debt after closing your business? The Korean government has introduced a long-term installment guarantee program that lets eligible small business owners repay debt over up to 15 years. Tailored for those who have shown sincere repayment, this government support program can be a solid springboard for a fresh start. Let’s break it down.
Sincere repayment: your path back up
Paying down debt after a business closure is tough. The program recognizes that effort and offers benefits for sincere repayment—not just paying bills, but building a bridge to credit recovery, reemployment, or even a re-startup.
What you can get
- Extended repayment term (up to 15 years)
- Low-interest refinancing loan
- Guarantee fee support
These ease your monthly burden, buy time to retrain or restart, and support better future financing conditions through improved credit.
What is the long-term installment guarantee?
Designed to relieve the COVID-19 impact on closed micro-enterprises, this program extends typical repayment from 7 years to up to 15 years through loan restructuring. That means a smaller monthly payment and more breathing room.
Why it was created
- Deteriorating business conditions due to COVID-19
- Heavier repayment pressure after closure
Launched on Sept 5, 2023, it offers term extensions, low-interest rates, and guarantee fee support so closed small businesses can move from survival to recovery.
Who qualifies?
Benefits apply to borrowers of government-backed loans who have since closed their businesses but continue sincere repayment. A valid business closure and repayment track record are key eligibility criteria.
Core eligibility
- Closure between Apr 1, 2020 and end-June 2025
- Currently making on-time payments on guaranteed loans
- Personal credit score within the bottom 95% or annual income ≤ KRW 80M
Meet these and you can access 15-year repayment options and low-interest terms.
Lower rates, covered fees, easier terms
Here’s what changes with the program:
Key benefits
- Interest: 5-yr KTB + 0.1% (preferential low-interest rate)
- Guarantee fee: fully government-supported
- Repayment: up to 15-year installments
The result: lower monthly payments, time to retrain or re-start, and better conditions for credit recovery.
How to apply (it’s simple)
Starting Sept 5, 2025, visit your local regional credit guarantee foundation branch (under the Korea Credit Guarantee Foundation network) at your former business location to apply in person.
Application process
- Visit your regional credit guarantee foundation branch
- Fill out the form and submit required documents
- Eligibility screening
- Benefits applied upon approval
Call 1588-7365 ahead of time to confirm documents and speed things up.
Big picture: relief now, restart next
Expect meaningful financial burden relief, stronger credit recovery prospects, and a healthier path to reemployment or a re-startup—with positive ripple effects on local economies.
Policy outcomes (what this enables)
- Lower monthly debt payments
- Momentum for local economic recovery
- Faster path to restoring creditworthiness
More support & things to note
Beyond term extensions, the government is expanding debt-refinancing options for closures and adding low-interest dismantling/removal loans to reduce real costs during shutdowns. Check the latest details in the policy briefing below.
Before you apply
- Sincere repayment status is essential
- Longer terms can mean higher total interest—plan accordingly
- Consult the regional credit guarantee foundation to tailor your repayment plan
Use every available government support program to overcome this phase and move toward a stronger future—you’ve got this. πͺ
FAQ
Who can apply for the long-term installment guarantee?
Borrowers of policy/guaranteed loans who closed their business and have continued sincere repayment. See eligibility notes above for dates and income/credit thresholds.
What benefits do I get?
Repayment terms up to 15 years, low-interest rates for loans ≤ KRW 100M (as applicable), and guarantee fee support.
How do I apply?
From Sept 5, 2025, visit your local regional credit guarantee foundation branch. Call 1588-7365 to confirm documents and details.
Why does sincere repayment matter?
It’s a must-have condition and accelerates credit recovery. Staying current helps unlock better financing later.
Are there other programs for closed small businesses?
Yes—expanded closure debt-refinancing and low-interest dismantling/removal loans are being added to reduce shutdown costs. Keep an eye on official updates.
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