Gov't extends policy loan repayment period for Tmon-WeMakePrice victims by up to 7 years

The government is moving to restructure debt for small and medium-sized enterprises and small business owners that received emergency policy loans after failing to collect settlement payments during the Tmon-WeMakePrice crisis, as repayment deadlines begin to arrive.

The Ministry of SMEs and Startups announced Tuesday it would work with the Korea SMEs and Startups Agency and the Small Enterprise and Market Service to offer borrower-tailored debt restructuring for companies affected by the crisis.

The ministry had previously extended emergency business stabilization funds to small businesses and self-employed operators that faced cash shortfalls after failing to receive settlement payments during the incident. As repayment periods on those policy loans have now come due, many affected firms continue to struggle financially, prompting calls to ease the repayment burden.

In response, the ministry will apply different debt restructuring approaches depending on each borrower's repayment capacity and delinquency status. Borrowers current on their payments will have their principal and interest burden reduced through the agencies' own internal restructuring programs. Those already in arrears will be connected to external debt restructuring mechanisms — including the Fresh Start Fund — to receive principal adjustments and reductions on interest and penalty charges.

The Korea SMEs and Startups Agency will reduce monthly principal repayments to 20 percent of the original amount for six months for firms that have already repaid at least 10 percent of their principal. Borrowers who then meet the adjusted repayment schedule will be eligible for a one-year extension under a "small-amount faithful repayment" linked support program. Repayment deferrals will also be available.

The Small Enterprise and Market Service will extend repayment periods by up to seven years for small business owners who are current on payments or fewer than 30 days delinquent and are experiencing temporary business difficulties. Self-employed operators who close their businesses and transition to salaried employment will receive a 0.5 percentage point interest rate reduction after one year of continuous employment.

The repayment burden facing Tmon-WeMakePrice victims has emerged as a new challenge roughly two years after the crisis erupted. At the time, the government supplied emergency funds to sellers caught in a liquidity crunch due to unsettled payments. While those policy loans helped firms weather the immediate cash crisis, the simultaneous expiration of grace periods has pushed a large number of affected companies into principal repayment at the same time, bringing the need for debt restructuring to the fore.

Both agencies plan to continuously inform affected firms whose repayment deadlines are approaching about available debt restructuring options. Companies struggling to repay their policy loans can consult with either agency to find a program suited to their individual circumstances.

"We will actively guide and support debt restructuring programs tailored to each company's repayment conditions, helping to ease the burden and support a return to normal operations," said Noh Yong-seok, first vice minister of SMEs and Startups.